SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                          Commission File No. 000-19235

                          SUMMIT FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

   SOUTH  CAROLINA                                                 57-0892056
(State  or  other  jurisdiction                                        (I.R.S.
 of  incorporation  or                                                Employer
 organization)                                                  Identification
                                                                         No.)

                  P. O. Box 1087, 937 North Pleasantburg Drive
                        Greenville, South Carolina  29602
          (Address of Principal Executive Offices, including zip code)

                                 (864) 242-2265
              (Registrant's Telephone Number, Including Area Code)

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      NONE

           Securities Registered Pursuant to Section 12(g) of the Act:
                 Title of Class:  COMMON STOCK, $1.00 PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.
YES   X     NO
     ---

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K.       X
                 ---

Indicate by checkmark whether the registrant is an accelerated filer (as defined
in  Rule  12b-2  of  the  Act).  YES     NO  X
                                           -----

The  aggregate  market  value  of  voting  and  nonvoting  common equity held by
non-affiliates  of  the Registrant computed by reference to the closing price of
such  stock  as  quoted  on  the NASDAQ National Market, as of June 28, 2002 was
approximately  $42.1  million.  For  purposes of the foregoing calculation only,
all  directors  and  executive  officers  of  the  Registrant  have  been deemed
affiliates.

As  of  March  17,  2003, there were 4,013,914 shares of the Registrant's Common
Stock,  $1.00  par  value,  outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE
(1)     Portions  of the Registrant's Definitive Proxy Statement for 2003 Annual
Meeting  of  Shareholders  is  incorporated  by  reference  in  Part  III.

<PAGE>

<TABLE>
<CAPTION>

                                              TABLE OF CONTENTS


<S>       <C>                                                                                             <C>
PART I
          Item 1 - Business                                                                                2
          The Company                                                                                      2
          Summit National Bank                                                                             2
          Summit Investment Services, Inc.                                                                 2
          Freedom Finance, Inc.                                                                            2
          Business Segments                                                                                3
          Territory Served and Competition                                                                 3
          Employees                                                                                        4
          Monetary Policy                                                                                  4
          Impact of Inflation                                                                              4
          Supervision and Regulation                                                                       4
          Item 2 - Properties                                                                             10
          Item 3 - Legal Proceedings                                                                      10
          Item 4 - Submission of Matters to a Vote of Security Holders                                    10

PART II
          Item 5 - Market for the Registrant's Common Stock and Related Stockholder Matters               11
          Item 6 - Selected Financial Data                                                                12
          Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations  13
          Item 7a - Quantitative and Qualitative Disclosures About Market Risk                            32
          Item 8 - Financial Statements and Supplementary Data                                            33
          Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   55

PART III
          Item 10 - Directors and Executive Officers of the Registrant                                    55
          Item 11 - Executive Compensation                                                                55
          Item 12 - Security Ownership of Certain Beneficial Owners and Management
          And Related Stockholder Matters                                                                 55
          Item 13 - Certain Relationships and Related Transactions                                        55
          Item 14 - Controls and Procedures                                                               55

PART IV
          Item 15 - Exhibits, Financial Statement Schedules and Reports on Form 8-K                       56
</TABLE>

<PAGE>

                                     PART I


ITEM  1.     BUSINESS

THE  COMPANY
     Summit  Financial  Corporation  (the  "Company") was incorporated under the
laws  of the State of South Carolina on May 26, 1989. The Company, headquartered
in  Greenville,  South Carolina, is a bank holding company formed under the Bank
Holding Company Act of 1956, as amended.  The Company became a financial holding
company  on  March  23,  2000  as provided by the "Gramm-Leach-Bliley" Financial
Services  Modernization  Act  of  1999.  Subsidiaries  of the Company are Summit
National  Bank  (the "Bank" or "Summit"), a national bank organized in 1990, and
Freedom  Finance,  Inc. (the "Finance Company" or "Freedom"), a consumer finance
company  organized  in  1994.  In  1997, the Bank incorporated Summit Investment
Services,  Inc., an investment and financial planning company, as a wholly-owned
subsidiary.  The  Company  has  no  foreign  operations.

     The  principal  role  of  the  Company  is  to supervise and coordinate the
activities  of its subsidiaries and to provide them with capital and services of
various  kinds.  The  Company  derives  substantially  all  of  its  income from
management  fees  for  services  performed,  interest on advances and loans, and
other  intercompany  payments as appropriate from the subsidiaries.  The Company
conducts  its business from four banking offices and 11 consumer finance offices
throughout  South  Carolina.

     At December 31, 2002, the Company had total assets of $302.2 million, total
deposits of $230.5 million, loans, net of unearned income, of $218.8 million and
shareholders'  equity  of  $28.7  million.  This  compares  with total assets of
$273.1  million,  total  deposits of $218.8 million, loans of $207.0 million and
shareholders'  equity  of  $24.6  million  at  December 31, 2001.  The operating
results  and  key  financial  measures  of  the Company and its subsidiaries are
discussed  more  fully  in  "Management's  Discussion  and Analysis of Financial
Condition  and  Results  of  Operations",  included in this report under Item 7.

SUMMIT  NATIONAL  BANK
     Summit  National  Bank,  headquartered  in  Greenville,  South  Carolina,
commenced  operations  in  July  1990.  The  Bank  targets  individuals  and
small-to-medium-sized businesses in the Upstate of South Carolina that require a
full range of quality banking services typically provided by the larger regional
banking  concerns,  but  who  prefer  the  personalized  service  offered  by  a
locally-based  institution.  The  Bank  currently  has its headquarters and four
full-service  branch  locations  in  Greenville and Spartanburg, South Carolina.
Summit provides a full range of deposit services that are typically available in
most  banks  and  savings and loan associations including checking accounts, NOW
accounts,  individual  retirement  accounts,  savings and other time deposits of
various  types  ranging  from  daily  money  market  accounts  to  longer-term
certificates  of  deposit.

     Deposits  of  the  Bank  are  insured up to $100,000 by the Federal Deposit
Insurance  Corporation  (the "FDIC").  The Company has no material concentration
of  deposits  from  any  single  customer or group of customers.  Other services
which  the  Bank  offers  include  safe  deposit  boxes, bank money orders, wire
transfer  facilities,  remote  internet  banking and various cash management and
electronic  banking  programs.

     The  Bank  also  offers a full range of short to intermediate-term, secured
and  unsecured  commercial  and  personal  loans for business, real estate, home
improvement,  automobiles,  letters  of  credit,  personal  investments and home
equity  lines  of  credit.  It  is  the  Bank's  intent  to  originate  quality,
profitable  loans  which  will  benefit the area's economy, provide a reasonable
return  to  our  shareholders,  and  promote the growth of the Bank.  Management
strives  to  maintain  quality  in  the  loan portfolio and to accept only those
credit  risks  which  meet  the  Bank's  underwriting standards.  No significant
portion of the Bank's loan portfolio is concentrated within a single industry or
group  of  related  industries.

SUMMIT  INVESTMENT  SERVICES,  INC.
     Summit Investment Services, Inc. commenced operations in November 1997.  It
provides  a full range of nondeposit investment products including annuities and
mutual  funds,  full  and  discount brokerage services, and financial management
services.  Summit Investment Services has offices in Greenville and Spartanburg,
South  Carolina.

FREEDOM  FINANCE,  INC.
     The  Finance  Company  makes  and services installment loans to individuals
with  loan  principal amounts generally not exceeding $2,000 and with maturities
ranging from three to 18 months.  The Finance Company, which is headquartered in
Greenville,  South  Carolina,  currently  has 11 branch offices throughout South
Carolina.  The  Finance  Company's  loan  customers  are  primarily  in  the
low-to-moderate  income  brackets and are engaged in widely diverse occupations.
A loan investigation and credit history review is made for each borrower, either
through  credit  reporting agencies or directly by Freedom's employees.  Freedom
also makes available to borrowers credit life, accident and health, and property
insurance  directly  related  to  the extension of credit to the individual. The
business  of  the  Finance  Company  is  rather seasonal and the amount of loans
outstanding  increases significantly at the end of each calendar year due to the
seasonal loan demand, while the first quarter of the calendar year often results
in  substantial  loan  paydowns.

BUSINESS  SEGMENTS
     SFAS  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information"  establishes  standards  for  the way that public businesses report
information about operating segments in annual financial statements and requires
that  those  enterprises report selected information about operating segments in
interim financial reports issued to shareholders.  It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers.  The  Company  has two reportable operating business segments, Summit
National  Bank  and  Freedom Finance, Inc.   Item 8, Note 21 to the Consolidated
Financial  Statements  discusses  the  Company's  business  segments,  which
information  is  incorporated  herein  by  reference.

TERRITORY  SERVED  AND  COMPETITION
     THE  BANK:  Summit  National  Bank  and  its  subsidiary, Summit Investment
Services,  Inc.,  are  located in the Upstate of South Carolina, with offices in
Greenville and Spartanburg.  The extended market area encompasses Greenville and
Spartanburg  Counties,  with  the principal market area being the urban areas of
these  counties.  The  Upstate  of  South  Carolina  is  a  highly  competitive
commercial  banking  market  in which all of the largest banks in the region are
represented.  The  Bank  competes  with  other  major  financial  institutions,
including  commercial banks, investment banks, mutual savings banks, savings and
loan  associations,  and  credit unions, as well as other non-bank institutions,
such  as  insurance  companies,  brokerage firms, and investment companies.  The
competition  among  the  various  financial  institutions is based upon interest
rates  offered  on deposit accounts, interest rates charged on loans, credit and
service  charges, the quality and range of services rendered, the convenience of
banking  facilities,  and,  in  the case of loans to large commercial borrowers,
relative  lending  limits.

     Many  of the competitor banks in the Bank's market area are subsidiaries of
bank  holding  companies  which  own banks in other southeastern states.  In the
conduct of certain areas of business, the Bank may also compete with savings and
loan associations, credit unions, insurance companies, securities firms, leasing
companies and other financial institutions, some of which are not subject to the
same  degree  of  regulation  and  restrictions  as the Bank.  The Bank may also
compete  with  out-of-state financial institutions which operate loan production
offices,  originate  mortgages,  accept money market deposits, and provide other
financial  services.  The  Bank's  investment  subsidiary  competes  with larger
brokerage houses and financial planners, discount brokers and internet brokerage
service  providers.

     Many  of  these  competitors  may  have substantially greater resources and
lending  abilities  than  the  Bank  due to their size and these competitors may
offer  services, such as international banking and trust services, that the Bank
is  not  currently  providing.  Moreover,  most of the competitors have multiple
branch  networks  located  throughout  the  extended market area, while the Bank
currently  has  only  four locations, which could be a competitive disadvantage.
As  a  result,  the  Bank  does not generally attempt to compete for the banking
relationships  of larger corporations, but concentrates its efforts on small and
medium-sized  businesses and individuals.  The Company believes that the Bank is
able  to  compete  effectively  in  this  market segment by offering competitive
pricing  of  services  and  quality,  experience  and  personal treatment in the
execution  of  services.

     The  Bank  and its subsidiary are not dependent upon a single or a very few
customers,  the  loss  of  which  would  have  a  material  adverse  effect.

     THE  FINANCE  COMPANY:  Freedom  Finance, Inc. serves its customers from 11
locations  throughout  South  Carolina.  Competition  between  consumer  finance
companies is not generally as intense as that among banks; however, this segment
of  the  market has become over-served in areas of South Carolina.  The amounts,
rates,  and  fees  charged  on consumer finance loans are regulated by state law
according  to  the  type of license granted by the South Carolina State Board of
Financial  Institutions.  Numerous  other  finance companies which offer similar
types  of  loans  are  located  in  the  areas  served  by  Freedom.

     The  Finance  Company  competes directly with national, regional, and local
consumer  finance  companies. The principal areas of competition in the consumer
finance  industry  are  convenience  of  services to customers, effectiveness of
advertising,  effectiveness of administration of loans, and the cost of borrowed
money.  Many  of  the  finance  companies  competing  with  Freedom  may  have
substantially  greater  resources and lending abilities than the Finance Company
and  may  have  more branches within the specific market areas in which they and
the  Finance  Company compete.  The Company believes that the Finance Company is
able  to  compete  effectively  in  its  current  markets.

EMPLOYEES
     As  of December 31, 2002, the Company and its subsidiaries employed a total
of  92 full-time equivalent employees.  The Company and its subsidiaries provide
a  variety of benefit programs including retirement and stock ownership plans as
well  as  health,  life, disability, and other insurance.  Summit also maintains
training,  educational,  and  affirmative  action  programs  designed to prepare
employees  for positions of increasing responsibility. The Company believes that
its  relations  with  its  employees  are  good.

MONETARY  POLICY
     The  earnings  of  the  Company  and  it's  bank subsidiary may be affected
significantly  by  the  monetary  policies  of  the  Federal Reserve Board which
regulates  the  money  supply in order to mitigate recessionary and inflationary
pressures.  Among  the  techniques  used  to implement these objectives are open
market  operations  in  United  States  Government  securities,  changes  in the
discount  rate  paid  by  member  banks  on  borrowings,  changes in the reserve
requirements against bank deposits and limitations on interest rates which banks
may pay on time and savings deposits.  The Federal Reserve uses these techniques
in  varying  combinations  to  influence overall growth and distribution of bank
loans,  investments  and  deposits, and their use may also affect interest rates
charged  on  loans  or  paid  on  deposits.

     The  monetary policies of the Federal Reserve have had a significant effect
on  the  operating  results  of commercial banks in the past and are expected to
continue to do so in the future.  Due to the changing conditions in the national
economy  and  money  markets,  as  well as the effect of actions by monetary and
fiscal  authorities,  the Company can make no prediction as to the future impact
that  changes  in interest rates, deposit levels, or loan demand may have on its
business  and  earnings.

IMPACT  OF  INFLATION
     Unlike  most  industrial companies, the assets and liabilities of financial
institutions  such  as  the  Company's bank subsidiary are primarily monetary in
nature.  As a result, interest rates generally have a more significant impact on
the performance of a financial institution than the effects of general levels of
inflation.  The  Company  believes  that  the effects of inflation are generally
manageable  through  asset-liability  management.

SUPERVISION  AND  REGULATION
     The  businesses  in  which the Company and its subsidiaries are engaged are
subject  to  extensive  supervision,  regulation and examination by various bank
regulatory  authorities  and  other governmental agencies in the state where the
Company  and  its  subsidiaries  operate.  The  supervision,  regulation  and
examination  to  which the Company and its subsidiaries are subject are intended
primarily  for  the  protection of depositors or are aimed at carrying out broad
public  policy  goals,  rather  than  for  the  protection  of security holders.

     Several  of  the more significant regulatory provisions applicable to banks
and bank holding companies to which the Company and its subsidiaries are subject
are  discussed  below,  along  with  certain  regulatory  matters concerning the
Company  and  its  subsidiaries.  To  the  extent that the following information
describes statutory or regulatory provisions, it is qualified in its entirety by
reference  to  the particular statutory provisions. Any change in applicable law
or  regulation  may  have a material effect on the business and prospects of the
Company  and  its  subsidiaries.

REGULATORY  AGENCIES

     Financial  Holding  Company:  The  Company  elected  to  become a financial
holding  company  on  March  23,  2000 and continues to be subject to regulation
under  the  Bank  Holding  Company  Act of 1956, as amended (the "BHCA"), and to
inspection, examination and supervision by the Board of Governors of the Federal
Reserve  System  (the  "Federal Reserve").  As a bank holding company registered
under  the  laws  of the State of South Carolina, the Company is also subject to
regulation  by  the  South  Carolina  State Board of Financial Institutions (the
"State  Board").  Consequently,  subject to certain exceptions, the Company must
receive  the approval of the State Board prior to engaging in the acquisition of
banking  or  nonbanking institutions or assets.  The Company is also required to
file annual reports and other information with the Federal Reserve and the State
Board  regarding  its financial condition, results of operations, management and
intercompany  relationships  and  transactions  between  the  Company  and  its
subsidiaries.

     Subsidiary  Bank:  The  Company's national bank subsidiary, Summit National
Bank  (the  "Bank"),  is  subject to regulation and examination primarily by the
Office of the Comptroller of Currency (the "OCC") and secondarily by the Federal
Reserve  and  the  FDIC.  The Bank is subject to various statutory requirements,
supervision and regulation promulgated and enforced by the OCC.  These statutes,
rules  and  regulations  relate  to  insurance  of  deposits, required reserves,
allowable  investments,  loans, mergers, consolidations, issuance of securities,
payment  of  dividends,  establishment  of  branches,  and  other aspects of the
business  of  Summit  National  Bank.

     Nonbank  Subsidiary:  The  Company's  nonbank  subsidiary  is  subject  to
regulation  by  the Federal Reserve, the State Board, and other applicable state
agencies.

THE  COMPANY

The  Sarbanes-Oxley  Act  of  2002:
-----------------------------------
     The  Sarbanes-Oxley Act of 2002 enacted on July 30, 2002, also known as the
Public  Company  Accounting  Reform  and  Investor  Protection Act of 2002 ("the
Act"),  is  the  most  far-reaching  securities legislation passed since the New
Deal.  The  Act effects sweeping changes in the responsibilities of officers and
directors  of public companies, and the corporate reporting obligations of these
companies  and  of  their  external  auditors.  Among  the  requirements  and
prohibitions  introduced  by  the  Act  are  certification  by  CEOs and CFOs of
periodic reports filed with the SEC; accelerated reporting of stock transactions
by  directors,  officers  and  large shareholders; prohibitions against personal
loans  from  companies  to  directors  and  officers,  except  loans made in the
ordinary  course  of  business;  new  requirements  for  public companies' audit
committees;  and  the  creation  of a public company accounting oversight board.
Final  rules  adopted  by  the  SEC  to  implement certain provisions of the Act
include  CEO  and  CFO  certifications  related  to the fair presentation of the
financial  statements  and  financial  information  in public filings as well as
management's  evaluation  of  disclosure  controls and procedures, disclosure of
whether  any  audit committee members qualify as "financial experts" as defined,
prohibition  of  directors  and executive officers from trading during a pension
plan  blackout  period,  disclosure  related  to  the  company's written code of
ethics,  and  reconciling  non-GAAP  financial  information  with GAAP in public
communications.  Additional  rules  to implement other provisions of the Act are
currently  pending  and  are  subject  to  finalization  in  2003.

Financial  and  Bank  Holding  Company  Activities:
---------------------------------------------------
     In  November  1999,  Congress  passed  the  "Gramm-Leach-Bliley"  Financial
Services  Modernization Act (the "GLB Act") which repealed two provisions of the
Glass-Stegall  Act  that previously separated banking, insurance, and securities
activities.  The  GLB  Act  created  a  new  financial  services  structure, the
financial  holding  company,  under  the  BHCA.  Financial holding companies may
engage in any activity that is deemed (1) financial in nature, (2) incidental to
any such financial activity, or (3) complementary to any such financial activity
and  does  not  pose a substantial risk to the safety or soundness of depository
institutions  or  the  financial  system  generally.

As a financial holding company, the Company may engage in, and acquire companies
engaged  in, activities that are considered "financial in nature," as defined by
the  GLB  Act  and  Federal  Reserve interpretations.  These activities include,
among  other things, lending, exchanging, transferring, investing for others, or
safeguarding  money  or  securities;  securities  underwriting;  dealing  in  or
market-making  in  securities;  insurance  underwriting  and  agency activities;
providing  financial,  investment,  or  economic  advisory  services;  merchant
banking;  and any activity currently permitted for bank holding companies by the
Federal  Reserve  Board  under  section 4(c)(8) of the Bank Holding Company Act.
The GLB Act does not authorize banks or their affiliates to engage in commercial
activities  that  are not financial in nature.  A bank holding company may elect
to  be treated as a financial holding company only if all depository institution
subsidiaries  of the holding company are well capitalized, well managed and have
at  least  a  satisfactory  rating  under  the  Community  Reinvestment  Act.

If  any  banking  subsidiary  of  the Company ceases to be "well capitalized" or
"well  managed"  under applicable regulatory standards, the Federal Reserve may,
among  other  things,  place limitations on the Company's ability to conduct the
broader  financial activities permissible for financial holding companies or, if
the  deficiencies persist, require the Company to divest the banking subsidiary.
In  addition,  if  any  banking  subsidiary  of the Company receives a Community
Reinvestment  Act  rating  of  less  than  satisfactory,  the  Company  would be
prohibited  from  engaging  in  any  additional  activities  other  than  those
permissible for bank holding companies that are not financial holding companies.
The Company may engage directly or indirectly in activities considered financial
in  nature,  either  de  novo or by acquisition, as long as it gives the Federal
Reserve  after-the-fact  notice of the new activities.  The GLB Act also permits
national banks, such as Summit National Bank, to engage in activities considered
financial  in  nature  through  a  financial  subsidiary,  subject  to  certain
conditions  and  limitations  and  with  the  approval  of  the  OCC.

     The  GLB  Act  adopts  a  system of functional regulation where the primary
regulator  is  determined  by the nature of the activity rather than the type of
institution.  Although  the  Federal  Reserve  is  the  umbrella  supervisor  of
financial  holding companies, the GLB Act limits the Federal Reserves's power to
supervise  and  conduct  examinations  of  affiliated companies of the financial
holding  company.  Rather,  under  the provisions of the GLB Act, the securities
activities  would  be  regulated  by  the  SEC  and other securities regulators,
insurance  activities by the state insurance authorities, and banking activities
by  the  appropriate  bank  regulator.

Control  Acquisitions:
----------------------
     The  BHCA  requires prior Federal Reserve approval for, among other things,
the  acquisition  by  a  bank holding company of direct or indirect ownership or
control  of more than 5% of the voting shares or substantially all of the assets
of  any  bank,  or  for a merger or consolidation of a bank holding company with
another bank holding company.  The Change in Bank Control Act prohibits a person
or  group  of persons from acquiring "control" of a bank holding company, unless
the  Federal  Reserve has been notified and has not objected to the transaction.
Under  a  rebuttable  presumption  established  by  the  Federal  Reserve,  the
acquisition  of 10% or more of a class of voting stock of a bank holding company
with a class of securities registered under Section 12 of the Exchange Act, such
as  the  Company,  would,  under the circumstances set forth in the presumption,
constitute  acquisition  of  control  of  the  bank  holding  company.

Liability  for  Banking  Subsidiaries
-------------------------------------
     Under  the  policy  of  the  Federal  Reserve  with respect to bank holding
company  operations,  a bank holding company is required to serve as a source of
financial  strength  to  its  subsidiary  depository  institutions and to commit
resources to support such institutions in circumstances where it might not do so
absent such policy.  This support may be required at times when the bank holding
company may not have the resources to provide it. In the event of a bank holding
company's  bankruptcy,  any  commitment  by  the  bank holding company to a U.S.
federal  bank  regulatory  agency  to  maintain the capital of a subsidiary bank
would  be assumed by the bankruptcy trustee and entitled to priority of payment.
If a default occurred with respect to a bank, any capital loans to the bank from
its  parent  holding company would be subordinate in right of payment to payment
of  the  bank's  depositors  and  certain  of  its  other  obligations.

FDICIA
------
     The  Federal  Deposit  Insurance  Corporation  Improvement  Act  of  1991
("FDICIA"),  and  the  regulations promulgated under FDICIA, among other things,
established  five  capital  categories for insured depository institutions which
are  well  capitalized,  adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized.  FIDICIA requires federal bank
regulatory  agencies  to  implement  systems  for "prompt corrective action" for
insured  depository  institutions  that do not meet minimum capital requirements
based  on  these  categories.  FDICIA  requires  that  a  bank  holding  company
guarantee  that  any  "undercapitalized"  (as  defined  in  the statute) insured
depository  institution  subsidiary  will  comply  with the terms of any capital
restoration  plan  filed by such subsidiary with its appropriate federal banking
agency  up to the lesser of (i) an amount equal to 5% of the institution's total
assets  at  the time the institution became undercapitalized, or (ii) the amount
that  is  necessary  (or  would  be  necessary)  to  bring  the institution into
compliance  with all applicable capital standards as of the time the institution
fails  to  comply  with  such  capital  restoration  plan.

     Under  Section  5(e)  of the BHCA, the Federal Reserve has the authority to
terminate any activity of a bank holding company that constitutes a serious risk
to  the  financial  safety, soundness, or stability of any subsidiary depository
institution  or  to  terminate  its control of such subsidiary.  Further, FDICIA
grants  federal  bank  regulatory authorities additional discretion to require a
bank  holding  company to devest itself of any bank or nonbank subsidiary if the
agency  determines that divesture may aid the depository institution's financial
condition.

Interstate  Banking  and  Branching
-----------------------------------
     As  a bank holding company, the Company is required to obtain prior Federal
Reserve  approval  before  acquiring  more  than  5%  of  the  voting shares, or
substantially  all  of  the  assets,  of a bank holding company, bank or savings
association.  The  passage  of  the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Riegle-Neal Act") has increased the ability of bank
holding  companies  and  banks  to  operate  across  state  lines.  Under  the
Riegle-Neal  Act,  with  the  approval  of  the  Federal Reserve, and subject to
nationwide  and  statewide  concentration limits, the Company and any other bank
holding  company  located  in  South  Carolina  may acquire or merge with a bank
located  in  any other state and a bank holding company located outside of South
Carolina  may  acquire or merge with any South Carolina-based bank, provided the
acquirer  is  adequately  capitalized  and adequately managed, as defined in the
Riegle-Neal Act.  The Riegle-Neal Act also permits de novo branching provisions.
The  legislation  preserves  the state laws which require that a bank must be in
existence  for  a  minimum  period of time before being acquired, as long as the
requirement  is  five  years  or  less.

     In  July  1996,  South  Carolina  enacted  the  South  Carolina Banking and
Branching  Efficiency  Act  of  1996  (the "Act") which provides that, except as
otherwise  expressly  permitted  by  federal  law  and  in limited circumstances
specified  in  the  Act, a company may not acquire a South Carolina bank holding
company  (as  defined  in  the  Act) or a bank chartered under the laws of South
Carolina  unless  the  company obtains prior approval from the State Board.  The
company  proposing  to  make  the  acquisition  must file with the State Board a
notice  or  application that the company filed with the responsible federal bank
supervisory  agency  and pay the fee, if any, prescribed by the State Board.  In
addition,  the  company  must  publish prior notice of the application once in a
daily  newspaper  of  general  circulation  in  South  Carolina  and  provide an
opportunity  for  public  comment.  If  the  company  proposing  to  make  the
acquisition  is  an  out-of-state  bank  holding  company, it must qualify to do
business  in  South Carolina or appoint an agent for service of process in South
Carolina.  The  Act  also  provides  that  approval  of  the State Board must be
obtained before an interstate bank merger involving a South Carolina bank may be
consummated.

Affiliate  Transactions
-----------------------
     The Company is an "affiliate" of the Bank within the meaning of the Federal
Reserve  Act, which imposes restrictions on loans by the Bank to the Company, on
investments  by  the  Bank in the stock or securities of the Company, and on the
use  of  such  stock  or  securities  as collateral for loans by the Bank to any
borrower.  The  Company  and  the Bank are subject to Section 23A of the Federal
Reserve  Act.  Section  23A  defines  "covered  transaction",  which includes an
extension of credit, and limits a bank's covered transactions with any affiliate
to  10%  of  such bank's capital and surplus.  All covered transactions with all
affiliates  cannot  in the aggregate exceed 20% of a bank's capital and surplus.
All covered and exempt transactions between a bank and its affiliates must be on
terms and conditions consistent with safe and sound banking practices, and banks
and  their  subsidiaries  are prohibited from purchasing low-quality assets from
the  bank's  affiliates.  Finally,  Section  23A  requires  that all of a bank's
extensions  of credit to an affiliate be appropriately secured by acceptable and
adequate  collateral,  as set forth in the regulation.  The Company and the Bank
are  also  subject  to  Section  23B of the Federal Reserve Act, which generally
limits  covered  and  other  transactions  among  affiliates  to  terms  and
circumstances, including credit standards, that are substantially the same or at
least  as  favorable to a bank holding company, a bank or a subsidiary of either
as  prevailing  at  the  time  for  comparable  transactions  with  or involving
unaffiliated  companies.

THE  BANK

General
-------
     The OCC is responsible for overseeing the affairs of all national banks and
periodically  examines national banks to determine their compliance with law and
regulations.  The  OCC  monitors  all  areas of the Bank's operations, including
loans,  mortgages,  issuance  of  securities, capital adequacy, risk management,
payment  of  dividends, and establishment of branches.  In addition, the OCC has
authority  to  issue  cease  and  desist orders against national banks which are
engaged in unsafe or unsound practice in the conduct of their business.  Federal
banking  laws  applicable  to all depository financial institutions, among other
things,  (i)  afford  federal  bank  regulatory  agencies with powers to prevent
unsafe  and unsound banking practices; (ii) restrict preferential loans by banks
to  "insiders"  of  banks;  (iii)  require banks to keep information on loans to
"insiders",  including shareholders, executive officers, and directors; and (iv)
bar  certain  director  and  officer  interlocks between financial institutions.

     National  banks are authorized by the GLB Act to engage, through "financial
subsidiaries,"  in  any  activity  that  is  permissible for a financial holding
company  (as  described  above)  and  any  activity  that  the  Secretary of the
Treasury,  in  consultation with the Federal Reserve, determines is financial in
nature  or  incidental  to  any  such  financial  activity, except (1) insurance
underwriting,  (2)  real estate development or real estate investment activities
(unless otherwise permitted by law), (3) insurance company portfolio investments
and  (4)  merchant  banking.  The  authority  of  a national bank to invest in a
financial  subsidiary  is  subject  to  a number of conditions, including, among
other  things,  requirements  that  the  bank  must  be  well  managed  and well
capitalized  (after deducting from the bank's capital outstanding investments in
financial  subsidiaries).

Community  Reinvestment  Act
----------------------------
     Summit  National  Bank  is  subject  to  the  requirements of the Community
Reinvestment  Act  of  1977  ("CRA").  CRA requires that, in connection with its
examinations of financial institutions, the OCC shall evaluate the record of the
Bank  in  meeting  the  credit  needs  of the local community, including low and
moderate  income  neighborhoods, consistent with the safe and sound operation of
the  Bank.  These  factors  are  also  considered  in  evaluating  mergers,
acquisitions,  and  applications to open a branch facility.  The federal banking
agencies,  including the OCC, issued a new joint rule which became effective for
the  Bank  in  1997 related to evaluating an institution's CRA performance.  The
new  rule  evaluates institutions based on their actual performance (rather than
efforts)  in meeting community credit needs.  Subject to certain exceptions, the
OCC  assesses the CRA performance of a bank by applying lending, investment, and
service  tests.  The  OCC  assigns  a  rating  to  a  bank  based  on the bank's
performance  under  the  tests.  To  evaluate  compliance  with  the  lending,
investment, and service tests, subject to certain exceptions, banks are required
to  collect  and  report to the OCC extensive demographic and loan data.  Summit
National  Bank  received  a  "satisfactory"  rating  in  its  most  recent  CRA
examination.

Federal  Home  Loan  Bank  Membership
-------------------------------------
     The  Bank  is  a  member  of the Federal Home Loan Bank of Atlanta ("FHLB")
which  provides  a  central  credit  facility primarily for member institutions.
Members of the FHLB are required to acquire and hold shares of capital stock in,
and  may  obtain advances from, the FHLB.  The amount of stock owned is based on
the  Bank's  balance  of  residential  mortgages  and the balance of outstanding
advances  from  the FHLB.  The FHLB makes advances to members in accordance with
policies  and  procedures  established  by  its Board of Directors.  The Bank is
authorized  to  borrow  funds  from  the FHLB to meet demands for withdrawals of
deposit  accounts,  to meet seasonal requirements, to fund expansion of the loan
portfolio,  or  for  general asset/liability management.  Advances are made on a
secured  basis.  Collateral on advances may be in the form of first mortgages on
1-4  family  real  estate  or  commercial real estate, government securities, or
other  assets  acceptable to the FHLB.  Interest rates charged for advances vary
depending  upon  maturity,  the  cost  of  funds to the FHLB, and general market
conditions.

Deposit  Insurance  Assessments
-------------------------------
     The Bank is also a member of the FDIC, which currently insures the deposits
of  each  member  bank  to  a  maximum  of  $100,000  per  depositor.  For  this
protection,  each  bank pays a semiannual statutory deposit insurance assessment
to  maintain the Bank Insurance Fund and is subject to the rules and regulations
of  the  FDIC.  Further,  the  FDIC  is authorized to impose one or more special
assessments  in  any  amount  deemed  necessary  to  enable repayment of amounts
borrowed  by  the  FDIC  from the United Stated Department of the Treasury.  The
FDIC  has  broad  authority  to  prohibit  Summit National Bank from engaging in
unsafe  or  unsound  banking  practices  and  may  remove or suspend officers or
directors  of  a bank to protect its soundness.  The FDIC requires insured banks
to  maintain  specified levels of capital, maintain certain security devices and
procedures  and  to  file  quarterly reports and other information regarding its
operations.  The  FDIC  requires  assessment  to  be  paid  by each FDIC-insured
institution  based on the institution's assessment risk classification, which is
determined  based  on  whether the institution is considered "well capitalized",
"adequately capitalized", or "undercapitalized", as such terms have been defined
in applicable federal regulations, and whether such institution is considered by
its  supervisory agency to be financially sound or to have supervisory concerns.

Prompt  Corrective  Action
--------------------------
     Pursuant  to  the  authority  granted  under  FDICIA,  U.S. bank regulatory
agencies  were empowered to take prompt corrective action to resolve problems of
insured  depository  institutions  and  impose  progressively  more  restrictive
constraints  on  operations, management and capital.  The extent of these powers
depends  upon  whether  the  institution  is  "well  capitalized",  "adequately
capitalized",  "undercapitalized",  "significantly  undercapitalized",  or
"critically  undercapitalized".  Under uniform regulations defining such capital
levels  issued  by  each  of  the federal banking agencies, a bank is considered
"well  capitalized"  if  it  has  (1) a total risk-based capital ratio of 10% or
greater;  (2) a Tier I risk-based capital ratio of 6% or greater; (3) a leverage
ratio of 5% or greater; and (4) is not subject to any order or written directive
to  meet  and  maintain  a  specific  capital  level  for  any  capital measure.

     Unless  a  banking  institution  is  well  capitalized,  it  is  subject to
restrictions  on certain aspects of its operations.  An undercapitalized banking
institution  must develop a capital restoration plan and its parent bank holding
company  must  guarantee the bank's compliance with the plan up to the lesser of
5%  of  the  bank's assets at the time it became undercapitalized and the amount
needed  to  comply  with  the  plan.  As of December 31, 2002, the Bank was well
capitalized,  based  on  the  prompt corrective action guidelines.  It should be
noted,  however,  that  a  bank's  capital category is determined solely for the
purpose  of applying the OCC's prompt corrective action regulations and that the
capital  category  may  not  constitute an accurate representation of the bank's
overall  financial  condition  or  prospects.

Brokered  Deposits
------------------
     Current  federal  law  regulates  the  acceptance  of  brokered deposits by
insured  depository  institutions  to  permit only "well capitalized" depository
institutions  to  accept  brokered  deposits  without prior regulatory approval.

Consumer  Privacy
-----------------
     The  deposit  operations  of  the  Bank  are  also  subject to the Right to
Financial  Privacy  Act  which  imposes  a  duty  to maintain confidentiality of
consumer  financial  records  and  prescribes  procedures  for  complying  with
administrative  subpoenas of financial records, and the Electronic Fund Transfer
Act  and  Regulation E issued by the Federal Reserve to implement that act which
governs  automatic  deposits  to  and  withdrawals  from  deposit  accounts  and
customers'  rights  and  liabilities  arising  from  the use of automated teller
machines  and  other  electronic  banking  services.

     The GLB Act also contains a number of other provisions that will affect the
Company's  operations  and the operations of all financial institutions.  One of
the  new  provisions,  which  became  effective  on July 1, 2000, relates to the
financial  privacy  of  consumers.  Federal  banking  regulators  issued  final
regulations in November 2000 related to consumer privacy which limit the ability
of  banks  and other financial entities to disclose non-public information about
consumers  to  non-affiliated  entities.  These  limitations  will  require more
disclosure  to  consumers,  and in some circumstances, to require consent by the
consumer  before  information  is  allowed  to  be  provided  to  a third party.

Other  Regulations
------------------
     Interest  and certain other charges collected or contracted for by the Bank
are  subject  to  state  usury laws and certain federal laws concerning interest
rates.  The  Bank's  operations  are  also  subject  to  certain  federal  laws
applicable  to  credit  transactions,  such  as the federal Truth-In-Lending Act
governing  disclosures  of  credit  terms  to  consumer borrowers; CRA requiring
financial institutions to meet their obligations to provide for the total credit
needs  of  the  community;  the  Home  Mortgage Disclosure Act of 1975 requiring
financial  institutions to provide information to enable the public to determine
whether  it  is  fulfilling  its  obligation  to  meet  the housing needs of the
community it serves; the Equal Credit Opportunity Act prohibiting discrimination
on  the  basis  of race, creed, or other prohibited factors in extending credit;
the  Fair  Credit  Reporting  Act  of  1978  governing the use and provisions of
information to credit reporting agencies; the Fair Debt Collection Act governing
the  manner  in  which  consumer  debts  may  be  collected;  and  the rules and
regulations  of  the various federal agencies charged with the responsibility of
implementing  such  federal  laws.

THE  FINANCE  COMPANY
     The  Company's  subsidiary  finance  company,  Freedom  Finance, Inc., is a
consumer  finance  company  licensed  and  regulated  by  the  State  Board.
Accordingly,  the Finance Company is subject to annual examinations by the State
Board  and  various  regulatory requirements, including annual reporting, annual
license  renewal,  and  other regulations pertaining to the extension of credit.
Specifically,  state  laws and regulations apply to maximum loan amounts, terms,
interest  rates  and  credit  insurance  and  other fee charges.  These laws and
regulations  are subject to both repeal and revision from time to time, often in
response  to  pressures  exerted  by  consumer  rights  groups.

CAPITAL  REQUIREMENTS
     Pursuant to the general supervisory authority conferred by the BHCA and the
directives  set  forth in the International Lending Supervision Act of 1983, the
Federal  Reserve and the OCC have adopted risk-based capital adequacy guidelines
for  banks and bank holding companies subject to their regulation as a means for
determining  the  adequacy  of  capital  based on the risks inherent in carrying
various  classes of assets and off-balance sheet items.  Failure to meet minimum
capital  requirements  can  initiate  certain  mandatory and possibly additional
discretionary  actions  by regulators that, if undertaken, could have a material
adverse  effect  on the financial statements.  Under capital adequacy guidelines
and  the  regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of
the  Company's  and the Bank's assets, liabilities and certain off-balance sheet
items  as  calculated  under regulatory accounting practices.  The Company's and
the  Bank's  capital  amounts and classification are also subject to qualitative
judgments  by  the  regulators  about  components,  risk  weightings,  and other
factors.

     Quantitative  measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of total
capital  to  risk-weighted  assets  (as  defined  in  the regulation) and Tier 1
capital (as defined in the regulation) to total assets.  Management believes, as
of  December  31,  2002, that the Company and the Bank meet all capital adequacy
requirements to which they are subject.  At December 31, 2002 and 2001, the Bank
was  categorized as "well capitalized" under the regulatory framework for prompt
corrective action as described above.  There are no current conditions or events
that  management  believes  would  change  the Company's or the Bank's category.

     The  Company's and the Bank's actual capital amounts and ratios at December
31,  2002 and 2001 as well as the minimum calculated amounts for each regulatory
defined  category  are included in this report under Part II, Item 8. "Financial
Statements  and  Supplementary  Data"  as  Note  15 to the Notes to Consolidated
Financial  Statements.

DIVIDENDS
     The  holders  of  the  Company's  common stock are entitled to receive cash
dividends  when  and  if  declared  by  the  Board of Directors out of the funds
legally available therefor.  The Company is a legal entity separate and distinct
from  its  subsidiaries  and  depends  in large part for its income available to
distribute  to  shareholders  on  the  payment  of  cash  dividends  from  its
subsidiaries.  While  the  Company  is  not  presently subject to any regulatory
restrictions  on dividends, the Bank is subject to such regulatory cash dividend
restrictions.

     Specifically, approval of the OCC will be required for any cash dividend to
be  paid to the Company by the Bank if the total of all dividends, including any
proposed  dividend,  declared by the Bank in any calendar year exceeds the total
of its retained net profits for that year combined with its retained net profits
for  the  preceding  two  years,  less  any  required  transfers  to  surplus.
Additionally,  the  National  Bank  Act provides that a national bank cannot pay
cash  dividends or other distributions to shareholders out of any portion of its
common  stock  or  preferred  stock  accounts  and that a bank shall pay no cash
dividend in an amount greater than its net profits then on hand, after deduction
of  its  losses  and bad debts.  As of December 31, 2002, no cash dividends have
been declared or paid by the Bank.  At December 31, 2002, the Bank had available
retained  earnings  of  $15.7  million.

FUTURE  LEGISLATION
     Changes  to the laws and regulations in the state where the Company and its
subsidiaries  do  business can affect the operating environment of financial and
bank  holding  companies and their subsidiaries in substantial and unpredictable
ways.  The Company cannot accurately predict whether legislation will ultimately
be  enacted,  and,  if  enacted,  the  ultimate  effect that it, or implementing
regulations,  would  have  upon  its or its subsidiaries' financial condition or
results  of  operations.


ITEM  2.  PROPERTIES

     The  operations  of the Company and the Bank do not require any substantial
investment  in  fixed  assets.  The principal executive offices for the Company,
the  Bank  and  the Finance Company are located at 937 North Pleasantburg Drive,
Greenville,  South  Carolina.  In  addition, this site serves as the Bank's main
branch.  The  building  at  this  location is approximately 7,500 square feet in
area  and  is  situated on a one-acre lot.  The Company executed a lease for the
land  and  building  and  assigned the lease to the Bank effective on the Bank's
commencement  of  operations.  The  initial term of the lease commenced April 1,
1990  and  renewal options were exercised in April 1995 and September 1998.  The
term  on  the  renewal  of  the lease is five years under substantially the same
terms.  Under  the  terms  of  the  original  lease, the Company has one renewal
option  remaining.  The  lease provides that the Company will be responsible for
real  property  taxes,  insurance, utilities and maintenance with respect to the
premises.  During  1995,  the  Bank  completed construction on approximately .63
acres  of  land  at  2201 Augusta Road, Greenville, South Carolina of its second
full  service  bank branch.  The facility is approximately 6,500 square feet and
is  fully  owned  and  occupied  by the Bank.  During April of 1998, the Company
entered  into  an agreement to lease a facility for a branch located at 800 East
North  Street, Greenville, South Carolina.  This facility, which was occupied in
October  1998,  serves  as  the third full service bank branch and as the Bank's
operations facility.  The facility is approximately 8,000 square feet and has an
initial lease term of seven years.  This agreement includes a renewal option for
an  additional  seven  year  period.  During 2000, the Bank purchased a 1.1 acre
land  parcel for construction of a fourth branch in Spartanburg, South Carolina.
The  branch  facility  was  completed in May 2001 and totals approximately 7,500
square  feet.

     The eleven Finance Company branches throughout South Carolina are housed in
leased  facilities  averaging 1,200 square feet each with lease terms from three
to  ten  years.  The  lease  agreements  have  various  renewal  options  under
substantially  the  same  terms  as  the  original  agreements.


ITEM  3.  LEGAL  PROCEEDINGS

     Although  the  Company  is  from  time  to  time  a  party to various legal
proceedings  arising out of the ordinary course of business, management believes
there  is  no litigation or proceeding threatened or pending against the Company
that  could  reasonably  be expected to result in a materially adverse change in
the  business  or  financial  condition  of  the  Company.


ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     There were no matters submitted to a vote of the shareholders in the fourth
quarter  of  the  Company's  fiscal  year  ending  December  31,  2002.


<PAGE>

                                     PART II

ITEM  5.     MARKET  FOR  THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

(a)  Market  information
     -------------------
     Summit  Financial  Corporation's  common  stock  is traded in the Small-Cap
market on the NASDAQ system under the symbol SUMM.  The following table presents
the  high,  low and closing sales prices for the Company's common stock for each
full  quarterly  period within the two most recent fiscal years.  The source for
the  following  information  was  the  Nasdaq  market.


<TABLE>
<CAPTION>


                                          2002                               2001
                         -----------------------------------  -----------------------------------
                            4Q       3Q       2Q       1Q       4Q       3Q       2Q        1Q
                         --------  -------  -------  -------  -------  -------  -------  --------
<S>                      <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>

Stock Price ranges: (1)

    High. . . . . . . .  $  16.69  $ 15.23  $ 15.00  $ 12.90  $ 11.19  $  9.52  $  9.43  $   9.52

    Low . . . . . . . .  $  14.05  $ 13.81  $ 12.38  $  9.38  $  8.70  $  8.75  $  8.62  $   8.16

    Close . . . . . . .  $  15.35  $ 14.75  $ 14.60  $ 12.90  $  9.52  $  9.07  $  8.98  $   9.52

    Volume traded . . .   134,934   49,124   77,687   52,004   55,831   25,872   40,698   111,775

<FN>

     (1)  Share data has been restated to reflect all 5% stock dividends issued.
</TABLE>


(b)  Holders
     -------
     As  of  March 12, 2003, there were 374 shareholders of record of the common
stock.  The  number  of  shareholders  does not reflect the number of persons or
entities  who  hold  their  stock  in  nominee  or "street" name through various
brokerage  firms.

(c)  Dividends
     ---------
     The  Company  has not paid any cash dividends.  The holders of common stock
are  entitled  to  receive  dividends  when  and  as  declared  by  the Board of
Directors.  The  Company's  present  policy  is  to  retain all earnings for the
operation  of  the  Company  until  such  time  as  future earnings support cash
dividend  payments.  Accordingly,  the  Company  does not anticipate paying cash
dividends  in the foreseeable future.  For information on dividend restrictions,
refer to Part II, Item 8. "Financial Statements and Supplementary Data", Note 17
under  Notes  to  Consolidated  Financial  Statements.

(d)  Equity Compensation Plan Information as of December 31, 2002 is as follows.

<TABLE>
<CAPTION>

                           EQUITY COMPENSATION PLAN INFORMATION


                                        (b)                (c)                 (d)
                                                                            Number of
                                                                           Securities
                                     Number of                              Remaining
(a)                              Securities to be                         Available for
                                    Issued Upon      Weighted-average    Future Issuance
                                    Exercise of          Price of         under Equity
                                    Outstanding        Outstanding        Compensation
                                     Options,            Options,       Plans (excluding
                                     Warrants,          Warrants,         securities in
Plan Category                       and Rights          and Rights         column (a))
-------------------------------  -----------------  ------------------  -----------------
<S>                              <C>                <C>                 <C>

Equity compensation plans
  approved by shareholders. . .            922,115  $             5.95            346,880
Equity compensation plans
  not approved by shareholders.             N/A                N/A                 N/A
                                 -----------------  ------------------  -----------------
Total . . . . . . . . . . . . .            922,115  $             5.95            346,880
                                 =================  ==================  =================
</TABLE>

<PAGE>

ITEM  6.     SELECTED  FINANCIAL  DATA
     The  information  presented  below  should  be read in conjunction with the
consolidated  financial  statements,  the  notes  thereto  and  "Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of Operations"
contained  under  Item  7  of  this  report.
<TABLE>
<CAPTION>

                               SELECTED CONSOLIDATED FINANCIAL AND OTHER
                        (All Dollar Amounts In Thousands, Except Per Share Data)


                                                    2002       2001       2000       1999       1998
                                                  ---------  ---------  ---------  ---------  ---------
<S>                                               <C>        <C>        <C>        <C>        <C>

SUMMARY OF OPERATIONS
   Net interest income . . . . . . . . . . . . .  $ 11,647   $ 10,398   $ 10,023   $  8,749   $  7,614
   Provision for loan losses . . . . . . . . . .       847        725        654        445        290
   Noninterest income. . . . . . . . . . . . . .     2,671      2,582      1,846      1,560      1,408
   Noninterest expense . . . . . . . . . . . . .     8,444      8,259      7,356      6,520      5,826
   Income taxes. . . . . . . . . . . . . . . . .     1,585      1,280      1,204        936      1,011
   Net income. . . . . . . . . . . . . . . . . .     3,442      2,716      2,655      2,408      1,895
      Per common share - basic (1) . . . . . . .      0.87       0.69       0.68       0.66       0.52
      Per common share - diluted (1) . . . . . .      0.76       0.63       0.62       0.56       0.44

YEAR END BALANCE SHEETS
   Investment securities . . . . . . . . . . . .  $ 63,464   $ 47,400   $ 32,445   $ 26,466   $ 27,102
   Loans, net of unearned income . . . . . . . .   218,800    207,041    180,521    148,170    130,669
   Allowance for loan losses . . . . . . . . . .     3,369      2,937      2,560      2,163      1,827
   Total assets. . . . . . . . . . . . . . . . .   302,206    273,097    249,835    191,229    170,485
   Noninterest-bearing deposits. . . . . . . . .    33,342     29,372     35,468     23,823     20,877
   Interest-bearing deposits . . . . . . . . . .   197,173    189,406    173,723    134,173    119,366
   Long-term debt - FHLB advances. . . . . . . .    27,100     21,900     13,000      7,000      5,000
   Shareholders' equity. . . . . . . . . . . . .    28,742     24,601     21,528     17,591     15,674
   Book value per share (1). . . . . . . . . . .      7.16       6.18       5.43       4.68       4.26

AVERAGE BALANCE SHEETS
   Investment securities . . . . . . . . . . . .  $ 52,157   $ 40,232   $ 28,681   $ 26,151   $ 27,500
   Loans, net of unearned income . . . . . . . .   211,704    195,573    159,711    138,989    120,488
   Total assets. . . . . . . . . . . . . . . . .   288,887    263,695    212,177    180,141    166,432
   Noninterest-bearing deposits. . . . . . . . .    29,678     26,549     21,746     19,204     17,502
   Interest-bearing deposits . . . . . . . . . .   197,631    190,713    153,624    132,468    125,897
   Shareholders' equity. . . . . . . . . . . . .    26,427     23,193     19,562     16,671     14,424

RATIOS AND OTHER DATA
   Return on average assets. . . . . . . . . . .      1.19%      1.03%      1.25%      1.34%      1.14%
   Return on average equity. . . . . . . . . . .     13.02%     11.71%     13.57%     14.45%     13.14%
   Net interest margin, tax-equivalent basis . .      4.38%      4.29%      5.11%      5.31%      4.95%
   Total risk-based capital. . . . . . . . . . .     13.20%     12.41%     12.21%     12.51%     12.16%
   Leverage capital. . . . . . . . . . . . . . .      9.70%      9.25%     10.13%      9.97%      9.08%
   Net charge-offs to average loans. . . . . . .      0.20%      0.18%      0.16%      0.08%      0.16%
   Nonperforming loans to loans, year end. . . .      0.22%      0.64%      0.19%      0.19%      0.36%
   Allowance for loan losses to loans, year end.      1.54%      1.42%      1.42%      1.46%      1.40%
   Closing market price per share (1). . . . . .  $  15.35   $   9.52   $   8.39   $  10.37   $  11.92
   Price to earnings, year end . . . . . . . . .      20.2       15.1       13.5       18.5       27.1

<FN>

(1)     All  per  share  data  has  been  restated  to  reflect  all  5%  stock  dividends  issued.
</TABLE>


ITEM  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     The  following information presents management's discussion and analysis of
the  financial  condition  and  results  of  operations  of  Summit  Financial
Corporation  ("the Company" or "Summit Financial"), a financial holding company,
and its wholly-owned subsidiaries, Summit National Bank ("the Bank" or "Summit")
and Freedom Finance, Inc. ("the Finance Company" or "Freedom").  The Bank, which
is  the  principal  subsidiary,  owns  all  the  outstanding  shares  of  Summit
Investment  Services,  Inc.  Throughout  this  discussion and analysis, the term
"the  Company"  refers  to  Summit  Financial  Corporation and its subsidiaries.

     This  discussion  and  analysis  should  be  read  in  conjunction with the
consolidated  financial  statements  and  supplemental  data contained elsewhere
herein.  Certain reclassifications have been made to prior years' financial data
to  conform  to  current financial statement presentations as well as to reflect
the  effect  of  the  5%  stock  dividend  paid  in  December  2002.

FORWARD-LOOKING  STATEMENTS

     Certain  statements  contained  herein  are  "forward-looking  statements"
identified  as  such  for purposes of the safe harbor provided in Section 27A of
the  Securities  Act  of  1933,  as  amended,  and Section 21E of the Securities
Exchange Act of 1934, as amended.  These forward-looking statements include, but
are  not  limited  to,  statements  as  to  industry  trends,  future results of
operations  or  financial  position,  borrowing  capacity  and future liquidity,
future  investment results, future credit exposure, future loan losses and plans
and  objectives  for  future operations, and other statements that do not relate
strictly  to  historical  facts.  These statements are not historical facts, but
instead  are  based on current expectations, estimates and projections about the
Company,  are  subject  to  numerous  assumptions,  risks and uncertainties, and
represent  only  management's  belief regarding future events, many of which, by
their  nature,  are inherently uncertain and outside the Company's control.  Any
forward-looking  statements  made  speak  only  as  of  the  date  on which such
statements  are  made.  The  Company  disclaims  any  obligation  to  update any
forward-looking  statements.  Forward-looking  statements  are not guarantees of
future performance and it is possible that actual results and financial position
may  differ,  possibly  materially,  from  the anticipated results and financial
condition  indicated  in  or  implied  by  these  forward-looking  statements.

     Factors  that  could cause actual results to differ from those indicated by
any  forward-looking  statements include, but are not limited to, the following:
  -  Inflation,  interest  rates,  market  and  monetary  fluctuations;
  -  Geopolitical  developments  and  any future acts or threats of war or
      terrorism;
  -  The  effects  of,  and changes in trade, monetary and fiscal policies
      and  laws,  including  interest  policies  of  the  Federal  Reserve;
  -  A  decline  in  general  economic  conditions and the strength of the
      local  economies  in  which  the  Company  operates;
  -  The  financial  condition  of  the  Company's borrowers and potential
      deterioration  of  credit  quality;
  -  Competitive  pressures  on  loan  and  deposit  pricing  and  demand;
  -  Changes  in  technology and their impact on the marketing of products
      and  services;
  -  The  timely  development  and  effective marketing of competitive new
       products  and  services;
  -  The  impact  of  changes  in  financial service laws and regulations,
      including  laws  concerning  taxes,  banking,  securities  and
      insurance;
  -  Changes  in  accounting  principles,  policies,  and  guidelines;
  -  The Company's success at managing the risks involved in the foregoing
      as  well  as  other  risks and uncertainties detailed from time to
      time in press releases  and  other  public  filings.

CRITICAL  ACCOUNTING  POLICIES

     The preparation of consolidated financial statements requires management to
make  estimates  and assumptions in the application of certain of its accounting
policies  about  the  effect  of  matters  that are inherently uncertain.  These
estimates  and  assumptions  affect  the  reported  amounts  of  certain assets,
liabilities,  revenues  and expenses.  Different amounts could be reported under
different  conditions,  or if different assumptions were used in the application
of  these accounting policies.  The Company considers its policies regarding the
allowance  for  loan losses to be its most critical accounting policy due to the
significant degree of management judgment involved.  This significant accounting
policy is detailed in the "Allowance for Loan Losses" section of this discussion
and  analysis and in Note 1 of the "Notes to Consolidated Financial Statements."

COMPANY  BUSINESS

     The  Company  is  headquartered in Greenville, South Carolina.  Through its
primary  subsidiary,  the  Bank,  the  Company  offers a full range of financial
products  and  services,  including  business and consumer loans, commercial and
residential mortgage lending and brokerage, asset-based financing, corporate and
consumer  deposit  services,  and  investment  management  services.  The  Bank
currently  has  four  full  service offices in Greenville and Spartanburg, South
Carolina.  Freedom  is  a  consumer finance company headquartered in Greenville,
South  Carolina.  The  Finance  Company primarily makes and services installment
loans  to individuals with loan principal amounts generally not exceeding $2,000
and  with  maturities  ranging  from  three  to  18 months.  Freedom operates 11
branches  throughout  South  Carolina.

     There is intense competition in all areas in which the Company conducts its
business.  The  Bank competes with other major financial institutions, including
commercial  banks,  investment  banks,  mutual  savings  banks, savings and loan
associations, and credit unions, as well as other non-bank institutions, such as
insurance companies, brokerage firms, and investment companies.  The competition
among the various financial institutions is based upon interest rates offered on
deposit accounts, interest rates and fees charged on loans, service charges, the
quality  and  range of services rendered, the convenience of banking facilities,
and,  in  the  case  of  loans  to  large commercial borrowers, relative lending
limits.  The Finance Company competes directly with national, regional and local
consumer  finance companies.  The principal areas of competition in the consumer
finance  industry  are  convenience  of  services to customers, effectiveness of
advertising,  effectiveness  of administration of loans and the cost of borrowed
money.  The  amounts,  rates,  and  fees  charged  on consumer finance loans are
generally  regulated  by  state  law  according  to the type of license granted.

RISK  MANAGEMENT

     Summit's  management  of  the risks inherent in its businesses is essential
for  financial  performance  and  creating  long-term  value. Risk management is
governed  by  policies  reviewed and approved annually by the Company's Board of
Directors.  The  goal of risk management is the control of the Company's primary
risk factors - credit risk, market risk, liquidity risk, and operating risk - to
support  the  prudent  use of capital.  These risks, if not effectively managed,
can  result  in  current losses to the Company as well as erosion of its capital
and  damage to its reputation.  Risk management techniques are structured around
certain  fundamental  risk  principals,  including  commitment from senior level
management;  clearly  defined  policies  and  procedures;  training; independent
oversight;  established  approval  processes;  management  information  systems;
measurement  and  analytical tools; and performance evaluation processes.  These
processes  assist  the  Company  in managing its risk exposures, but they cannot
fully  insulate  the Company from losses.  The Company's business requires it to
take  risks  while ensuring that it receives adequate compensation for the risks
undertaken.  Despite  best efforts, losses will periodically occur, particularly
with  respect  to credit risk, when unanticipated events challenge the limits of
risk  management  processes.

RESULTS  OF  OPERATIONS

GENERAL
     The  Company  reported a record year of earnings in 2002, up 27% from 2001.
Net  income  totaled  $3.4 million, or $0.76 diluted earnings per share, in 2002
compared  with  $2.7  million,  or $0.63 diluted earnings per share, in 2001 and
$2.65  million,  or $0.62 diluted earnings per share, for 2000.  The improvement
in  net  income  and earnings per share between 2001 and 2002 resulted primarily
from  the  growth  in  earning assets and a significant reduction in the cost of
funds resulting in a higher net interest margin.  Increases in other income also
contributed  to  the  higher net income in 2002, offset somewhat by increases in
other  expenses  and  higher  provision  for  loan  losses.

NET  INTEREST  INCOME
     Net interest income is the difference between the interest earned on assets
and  the  interest paid for the liabilities used to support those assets.  It is
the  largest  component  of  the  Company's earnings and changes in net interest
income have the greatest impact on net income.  Variations in the volume and mix
of  assets  and  liabilities  and  their  relative  sensitivity to interest rate
movements  determine  changes  in  net  interest  income.

     During  2002,  the Company recorded net interest income of $11.6 million, a
12%  increase  from  the  2001  net  interest  income of $10.4 million.  This is
compared  to net interest income of $10.0 million for 2000.  Fluctuations in net
interest  income  between  years  is related to changes in the volume of average
earning  assets  and  interest-bearing  liabilities,  combined  with  changes in
average  yields  and  rates  of  the  corresponding  assets  and  liabilities as
demonstrated  in  the  tables  following  under  "Average  Balance  Sheets".

     Net interest margin is calculated as net interest income divided by average
earning  assets.  For  the  year  ended  December  31,  2002,  the Company's net
interest  margin was 4.38% (fully tax-equivalent), compared to 4.29% in 2001 and
5.11%  for  2000.  The  margin  for 2002 increased 9 basis points from the prior
year  due  to  the reduction in the Company's cost of funds related to repricing
deposits  and  FHLB advances to lower current market rates throughout 2002.  The
reduction  in  cost  of  funds  was  greater  than the drop in asset yield, thus
resulting  in  a higher net interest margin.  During 2001, the interest yield on
assets  decreased  more rapidly than the interest cost on liabilities supporting
those assets, thus, the margins between 2000 and 2001 decreased 82 basis points.

Interest  Income
     Interest  income  for  2002 was $17.8 million, which was a decrease of $2.4
million,  or 12%, from the $20.2 million for 2001.  Interest income for 2000 was
$19.4  million.  The  decrease  between  2001  and  2002  is a result of the 10%
increase in average earning assets being more than offset by the 160 basis point
reduction in the average yield on assets.  Interest income was higher in 2001 as
compared  to  2000  primarily as a result of the 24% increase in earning assets.
The tax-equivalent yield on interest-earning assets decreased from 9.78% in 2000
to  8.23% in 2001, and decreased to 6.63% in 2002 due to declines in the general
interest  rate  environment  during  the  three  year  period.

     Interest  earned  on  the  loan  portfolio was $14.9 million in 2002, $17.3
million  in  2001,  and $16.9 million in 2000.  Loans averaged $211.7 million in
2002  with an average yield of 7.04%, compared to $195.6 million in 2001 with an
average  yield  of  8.84%,  and  $159.7 million in 2000 with an average yield of
10.57%.  In  excess  of  60% of the Company's loan portfolio adjusts immediately
with changes in the prime lending rate.  Thus, the decline in average yield each
year  is directly related to the significant drop in the average prime rate from
9.23% in 2000, to 6.91% in 2001, to 4.68% for 2002.  The higher level of average
loans  each  year,  combined  with  the effect of fluctuations in average yield,
resulted  in  changes  in  interest  income  on loans for the three-year period.

     The  second  largest  component  of  interest  income  is earnings from the
Company's  investment  portfolio  which  averaged  $52.2  million yielding 5.81%
(fully tax-equivalent) in 2002.  This is compared to average securities of $40.2
million  in 2001 yielding 6.49%, and $28.7 million yielding 6.86% for 2000.  The
fluctuations  in  the  average  yield  of  the investment portfolio each year is
related  to the timing, maturity distribution and types of securities purchased,
called,  matured,  and  sold, combined with fluctuations in the general interest
rate  environment.  The increase in average securities, offset somewhat by lower
yields  each  year, resulted in an increase in interest income on investments of
$340,000,  or  15%,  between 2001 and 2002, and an increase of $617,000, or 36%,
between  2000  and  2001.

Interest  Expense
     The  Company's interest expense for 2002 was $6.2 million, compared to $9.8
million  for  2001  and  $9.4  million  for  2000.  Interest-bearing liabilities
averaged $230.3 million in 2002 with an average rate of 2.68%, $211.2 million in
2001  with  an  average  rate of 4.64%, and an average of $168.5 million with an
average rate of 5.57% during 2000.  The 37% decrease in interest expense in 2002
was  related  to  the  196  basis point decrease in the cost of funds, partially
offset by the 9% increase in average interest-bearing liabilities.  The increase
in  interest  expense  in  2001  from  2000  was a result of the 25% increase in
average  interest-bearing  liabilities,  offset  somewhat  by the 93 basis point
decrease  in  the cost of funds.  The reductions in average cost of funds during
2002  and  2001  were a direct result of declining interest rates throughout the
period  combined  with  the  maturity  of CDs and FHLB advances renewed at lower
current  market  rates.


AVERAGE  BALANCE  SHEETS
     The  following  table presents certain information related to the Company's
average  balance  sheet  and  its  average yields on assets and average costs of
liabilities  for  the last three years.  Also presented is the average yields on
assets and costs of liabilities at December 31, 2002.  Such yields and rates are
derived  by  dividing  income  or  expense  by  the  average  balance  of  the
corresponding  assets  or  liabilities.  Average  balances  have been calculated
based  on  daily  averages.

<TABLE>
<CAPTION>



(dollars in thousands)                                               2002                         2001
------------------------------------------              ---------------------------   --------------------------
                                              AVERAGE
                                            YIELD/RATE   AVERAGE   INCOME/   YIELD/   AVERAGE   INCOME/   YIELD/
                                             12/31/02    BALANCE   EXPENSE    RATE    BALANCE   EXPENSE    RATE
                                            ----------  --------  --------  -------  --------  --------   ------
<S>                                         <C>          <C>       <C>       <C>      <C>       <C>       <C>
ASSETS
Earning assets:
Loans, net of unearned income (1). . . . .        6.53%  $211,704  $ 14,914    7.04%  $195,573  $ 17,293    8.84%
Investment securities (taxable) (2). . . .        4.57%    37,425     1,934    5.17%    28,940     1,751     .05%
Investment securities
(non-taxable) (2) (3). . . . . . . . . . .        7.31%    14,732       725    7.46%    11,292       568    7.62%
Federal funds sold . . . . . . . . . . . .        1.13%     4,913        80    1.63%     7,808       318    4.07%
Investment in stock (4). . . . . . . . . .        4.76%     2,087       108    5.17%     1,485        96    6.46%
Interest-bearing bank balances . . . . . .        1.18%     3,522        60    1.70%     4,054       179    4.42%
                                            -----------  --------  --------  -------  --------  --------  -------
     Total earning assets. . . . . . . . .        6.13%   274,383  $ 17,821    6.63%   249,152  $ 20,205    8.23%
Non-earning assets                          ===========    14,504  ========  =======    14,543  ========  =======
                                                         --------                     --------
     Total average assets                                $288,887                     $263,695
                                                         ========                     ========

LIABILITIES & SHAREHOLDERS' EQUITY
Interest-bearing deposits:
  Interest-bearing demand. . . . . . . . .        0.43%  $ 21,074  $    155    0.73%  $ 17,475  $    329    1.88%
  Savings and money market . . . . . . . .        1.18%    75,207     1,163    1.55%    78,513     2,780    3.54%
  Time deposits, $100,000 and over . . . .        2.76%    49,860     1,579    3.17%    47,705     2,737    5.74%
  Other time deposits. . . . . . . . . . .        2.92%    51,490     1,701    3.30%    47,020     2,782    5.92%
                                            -----------  --------  --------  -------  --------  --------  -------
     Total interest-bearing deposits . . .        1.95%   197,631     4,598    2.33%   190,713     8,628    4.52%
FHLB advances. . . . . . . . . . . . . . .        4.10%    32,207     1,563    4.85%    19,891     1,146    5.76%
Federal funds purchased and
 other short-term borrowings . . . . . . .        1.59%       441        13    2.85%       558        33    5.91%
                                            -----------  --------  --------  -------  --------  --------  -------
     Total interest-bearing liabilities. .        2.33%   230,279  $  6,174    2.68%   211,162  $  9,807    4.64%
Noninterest bearing deposits                ===========    29,678  ========    =====    26,549   =======    =====
Other noninterest bearing liabilities                       2,503                        2,791
                                                         --------                     --------
     Total liabilities                                    262,460                      240,502
Shareholders' equity                                       26,427                       23,193
                                                         --------                     --------
     Total average liabilities and equity                $288,887                     $263,695
                                                         ========                     ========
Net interest margin (5)                                            $ 11,647    4.38%            $ 10,398    4.29%
                                                                   ========  =======            ========  =======
Interest rate spread (6)                                                       3.95%                        3.59%
                                                                             =======                      =======



(dollars in thousands)                                         2000
------------------------------------------  -------------------------------------


                                               AVERAGE        INCOME/   YIELD/
                                               BALANCE        EXPENSE    RATE
                                            --------------  --------  -------
<S>                                         <C>             <C>       <C>
ASSETS
Earning assets:
Loans, net of unearned income (1). . . . .  $      159,711  $ 16,882   10.57%
Investment securities (taxable) (2). . . .          18,405     1,187    6.45%
Investment securities
(non-taxable) (2) (3). . . . . . . . . . .          10,276       515    7.59%
Federal funds sold . . . . . . . . . . . .           8,790       563    6.41%
Investment in stock (4). . . . . . . . . .           1,221        87    7.13%
Interest-bearing bank balances . . . . . .           2,748       183    6.66%
                                            --------------  --------  -------
     Total earning assets. . . . . . . . .         201,151  $ 19,417    9.78%
Non-earning assets . . . . . . . . . . . .          11,026  ========  =======
                                            --------------
     Total average assets. . . . . . . . .  $      212,177
                                            ==============

LIABILITIES & SHAREHOLDERS' EQUITY
Interest-bearing deposits:
  Interest-bearing demand. . . . . . . . .  $       12,168  $    382    3.14%
  Savings and money market . . . . . . . .          59,203     3,012    5.09%
  Time deposits, $100,000 and over . . . .          37,176     2,315    6.23%
  Other time deposits. . . . . . . . . . .          45,077     2,754    6.11%
                                            --------------  --------  -------
     Total interest-bearing deposits . . .         153,624     8,463    5.51%
FHLB advances. . . . . . . . . . . . . . .          14,131       878    6.21%
Federal funds purchased and
 other short-term borrowings . . . . . . .             754        53    7.03%
                                            --------------  --------  -------
     Total interest-bearing liabilities. .         168,509  $  9,394    5.57%
Noninterest bearing deposits . . . . . . .          21,746  ========   ======
Other noninterest bearing liabilities. . .           2,360
                                            --------------
     Total liabilities . . . . . . . . . .         192,615
Shareholders' equity . . . . . . . . . . .          19,562
                                            --------------
     Total average liabilities and equity.  $      212,177
                                            ==============
Net interest margin (5)                                     $ 10,023    5.11%
                                                            ========  =======
Interest rate spread (6)                                                4.21%
                                                                      =======

<FN>

(1)  -  Average  loans  are  stated net of unearned income and include non-accrual loans.  Interest recognized on
non-accrual  loans  has  been  included  in interest  income.
(2)  -  Average  yield  on  investment  securities  is  computed  using  historical cost balances; the yield
information  does  not  give  effect  to  changes  in  fair  value that  are  reflected  as  a  component
of  shareholders'  equity.
(3)  -  Yields  on  nontaxable  investment securities have been adjusted to a tax equivalent basis assuming a 34%
Federal  tax  rate.
(4)  -  Includes  investments  in  stock  of  Federal  Reserve  Bank, Federal Home Loan Bank, and other equities.
(5)  -  Net  interest  margin  is  computed  by  dividing net interest income (adjusted to a tax equivalent basis
assuming  a  34%  Federal  tax  rate)  by  total  average earning  assets.
(6)  - Interest rate spread is the difference between the average yield on earning assets and the average rate on
interest-bearing  liabilities.

</TABLE>

<PAGE>

RATE/VOLUME  ANALYSIS
     The  following  table  presents  the  dollar  amount of changes in interest
income,  interest expense and net interest income attributable to changes in the
volume  of  interest-earning  assets  and  interest-bearing  liabilities and the
amount  attributable  to  changes  in rates earned and paid on the corresponding
assets  and  liabilities.
<TABLE>
<CAPTION>

(dollars in thousands)                             2001 - 2002                                 2000 - 2001
----------------------                 ---------------------------------------   -----------------------------------
                                             CHANGE RELATED TO                        CHANGE RELATED TO
                                       ----------------------------              --------------------------
                                                             RATE/     TOTAL                         RATE/    TOTAL
                                        VOLUME     RATE     VOLUME    CHANGE     VOLUME     RATE    VOLUME    CHANGE
                                       --------  ---------  -------  ---------  --------  --------  -------  --------
<S>                                    <C>       <C>        <C>      <C>        <C>       <C>       <C>      <C>
EARNING ASSETS:
Loans, net of unearned income . . . .  $ 1,426    ($3,515)   ($290)   ($2,379)  $ 3,791   ($2,760)   ($620)  $   411
Investment securities (taxable) . . .      513       (255)     (75)       183       679       (73)     (42)      564
Investment securities (non-taxable) .      173        (12)      (4)       157        50         3        0        53
Federal funds sold. . . . . . . . . .     (118)      (191)      71       (238)      (63)     (205)      23      (245)
Other . . . . . . . . . . . . . . . .       16       (129)       6       (107)      106       (70)     (31)        5
                                       --------  ---------  -------  ---------  --------  --------  -------  --------
     Total interest income. . . . . .    2,010     (4,102)    (292)    (2,384)    4,563    (3,105)    (670)      788
                                       --------  ---------  -------  ---------  --------  --------  -------  --------
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits:
  Interest-bearing demand . . . . . .       68       (201)     (41)      (174)      167      (153)     (67)      (53)
  Savings and money market accounts .     (117)    (1,566)      66     (1,617)      998      (925)    (305)     (232)
  Time deposits, $100,000 and over. .      124     (1,226)     (56)    (1,158)      656      (182)     (52)      422
  Other time deposits . . . . . . . .      264     (1,229)    (116)    (1,081)      119       (87)      (4)       28
                                       --------  ---------  -------  ---------  --------  --------  -------  --------
     Total interest-bearing deposits.      339     (4,222)    (147)    (4,030)    1,940    (1,347)    (428)      165
FHLB advances . . . . . . . . . . . .      710       (181)    (112)       417       358       (64)     (26)      268
Other . . . . . . . . . . . . . . . .       (7)       (17)       4        (20)      (12)      (13)       5       (20)
                                       --------  ---------  -------  ---------  --------  --------  -------  --------
     Total interest expense . . . . .    1,042     (4,420)    (255)    (3,633)    2,286    (1,424)    (449)      413
                                       --------  ---------  -------  ---------  --------  --------  -------  --------
NET INTEREST DIFFERENTIAL . . . . . .  $   968   $    318     ($37)  $  1,249   $ 2,277   ($1,681)   ($221)  $   375
                                       ========  =========  =======  =========  ========  ========  =======  ========
</TABLE>

<PAGE>

PROVISION  FOR  LOAN  LOSSES
     The  provision  for loan losses was $847,000 in 2002, $725,000 in 2001, and
$654,000  in  2000.  A component of the change in the provision each year is the
level  of  net  originations as follows: $12.2 million in 2002, $26.9 million in
2001,  and  $32.6  million  in 2000.  As discussed under the "Allowance for Loan
Losses"  section  below,  other  factors  influencing  the amount charged to the
provision each year include the total amount of past due, classified, and "watch
list"  loans,  trends  in nonperforming assets, and the charge-off activity each
year.  Thus, in addition to the general economic uncertainty throughout 2001 and
2002,  factors contributing to the higher provision each year included increases
in net charge-off activity from 0.16% of average loans in 2000, to 0.18% in 2001
and  0.20%  in 2002; and the fluctuations in nonperforming assets which amounted
to  0.22%, 0.64%, and 0.19% of gross loans at December 31, 2002, 2001, and 2000,
respectively.  Further,  the  Bank's  total  "watch  list"  loans, which include
classified  loans,  non-accrual  loans,  and  other  assets especially mentioned
("OAEM")  in the Bank's internal credit grading procedures and periodic reviews,
have  increased  from 7.5% of gross loans at December 31, 2001 to 7.9% as of the
2002  year end.  Estimates charged to the provision for loan losses are based on
management's  judgment as to the amount required to cover probable losses in the
loan  portfolio,  and  are  adjusted  as  necessary  based on a calculated model
quantifying  the  estimated  required  balance  in  the  allowance.

NONINTEREST  INCOME  AND  EXPENSES
     Noninterest  income increased $89,000, or 3%, in 2002, to $2.7 million from
$2.6  million  in  2001  and $1.8 million in 2000.  The higher amount in service
charges  and  fees  on deposit accounts, which increased 29% in 2002 to $553,000
from  $430,000  in  2001  and  $369,000  in  2000,  is  related  to increases in
transaction fees and the higher number of Bank deposit accounts and transactions
subject  to service charges and fees each year.  Insurance commission fee income
rose  21%  to  $587,000  in  2002  from  $485,000  in 2001 and $337,000 in 2000,
primarily  related  to  the  volume  of annuity product sales made by the Bank's
nondeposit  investment  subsidiary.  These  increases  in  2002 were offset by a
lower  gain  on  sales  of  investment securities which totaled $117,000 in 2002
compared  with  $257,000  for 2001 and $12,000 in 2000.  Fluctuations in gain on
sales of investment securities are primarily related to the volume of investment
sales  each year from the Company's available for sale investment portfolio.  In
addition to the volume of transactions, changes in general market interest rates
and  thus,  the  market  valuations,  affect  the  amount  of  gain  recorded.

     Increases in the line item, "other income", which was up $11,000, or 1%, in
2002 and $201,000 in 2001, is primarily related to fluctuations in (1) the level
of  mortgage and other loan referrals and loan late fees which increased $65,000
in  2002  and  $186,000  in 2001; and (2) the level of mutual fund and brokerage
activity  in the Bank's nondeposit investment subsidiary which decreased $55,000
in  2002  and  $41,000  in  2001.  Additional  fluctuations  in other income are
related  to  the  normal activity of the Bank and the level of transactions each
year.

     Noninterest expense totaled $8.4 million in 2002, $8.3 million in 2001, and
$7.4  million  in  2000.  A  majority  of  the  increased expenditures each year
reflects  the cost of additional personnel hired to support the Company's growth
and  new facilities.   The most significant item included in noninterest expense
is  salaries,  wages  and  benefits which amounted to $5.1 million in 2002, $4.8
million  in 2001, and $4.3 million in 2000.  The increase of $245,000, or 5%, in
2002 was primarily related to normal annual raises and increases in group health
insurance premiums.  The increase of $536,000 or 13% in 2001 was a result of (1)
normal  annual  raises  and replacement of staff; (2) a full year in 2001 of new
branch  staff,  including  three  officers,  added  in  September  2000; and (3)
increases  in  benefit  plan costs including group health insurance premiums and
401K  deferral  matches  related  to  higher  salaries.

     Occupancy  and  furniture,  fixtures,  and  equipment  expenses  remained
relatively  flat  in 2002 due to reductions in expenses associated with a mobile
facility  used  through  mid-2001 being offset by normal increases in utilities,
maintenance,  and  other ongoing occupancy and equipment expenses.  For the 2001
year, these expenses increased $26,000, or 2%, related primarily to the expenses
associated  with  new  branch  facilities.

     Included in the line item "other expenses", which decreased $58,000, or 3%,
between 2001 and 2002 and increased $341,000, or 19%, between 2000 and 2001, are
charges  for  advertising  and  public relations; insurance claims and premiums;
printing  and  office support; merchant program expenses; legal and professional
services;  and  other branch and customer related expenses.  A majority of these
items are related directly to the normal operations of the Bank and fluctuate in
relation  to the increase in assets, the higher level of transaction volume, and
the  larger  number of customer accounts. The decline in 2002 is primary related
to  a  decrease  in  amortization  of  goodwill  of  $157,000.  This decrease is
partially  offset by higher levels of legal and professional fees of $60,000 and
advertising of $41,000.  The most significant increases in 2001 relate to higher
advertising  for the new branch opening ($54,000), higher volume of transactions
and  other  fees  on the credit card portfolio ($93,000), increases in legal and
consultant  expenses  related to loan collections and security audits ($95,000),
and  higher  branch-related  expenses  due  to  a  full  year with an additional
facility  ($40,000).

INCOME  TAXES
     The Company recorded an income tax provision of $1.6 million, $1.3 million,
and  $1.2 million in 2002, 2001, and 2000, respectively.  The effective tax rate
in each year was 31.5%, 32.0%, and 31.2%, respectively.  The change in effective
rate  each  year  is  primarily related to fluctuations in the level of tax-free
municipal  investments  and  other  permanent  tax  differences.

QUARTERLY  OPERATING  RESULTS
     The  following  summarizes  selected  quarterly  operating  results for the
quarters  ended  in  2002  and  2001.

<TABLE>
<CAPTION>

(dollars  in  thousands,  except
  per share data)                              2002                                            2001
                           ----------------------------------------------   ---------------------------------------------
                             FIRST       SECOND      THIRD       FOURTH      FIRST       SECOND      THIRD       FOURTH
                            QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER
                           ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
<S>                        <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Interest income . . . . .  $    4,465  $    4,453  $    4,515  $    4,388  $    5,378  $    5,085  $    5,071  $    4,671
Interest expense. . . . .       1,611       1,540       1,562       1,461       2,768       2,532       2,469       2,038
                           ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Net interest income . . .       2,854       2,913       2,953       2,927       2,610       2,553       2,602       2,633
Provision for loan losses         125         225         196         301         128         209         148         240
                           ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Net interest income after
 provision. . . . . . . .       2,729       2,688       2,757       2,626       2,482       2,344       2,454       2,393
Noninterest income. . . .         682         662         682         645         583         689         650         660
Noninterest expense . . .       2,273       2,178       2,106       1,887       2,079       2,042       2,085       2,053
                           ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Income before taxes . . .       1,138       1,172       1,333       1,384         986         991       1,019       1,000
Income taxes. . . . . . .         365         372         424         424         324         317         329         310
                           ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------
Net income. . . . . . . .  $      773  $      800  $      909  $      960  $      662  $      674  $      690  $      690
                           ==========  ==========  ==========  ==========  ==========  ==========  ==========  ==========
NET INCOME PER SHARE:
   Basic. . . . . . . . .  $     0.20  $     0.20  $     0.23  $     0.24  $     0.17  $     0.17  $     0.18  $     0.17
   Diluted. . . . . . . .  $     0.17  $     0.18  $     0.20  $     0.21  $     0.15  $     0.16  $     0.16  $     0.16
AVERAGE COMMON SHARES
 OUTSTANDING:
   Basic. . . . . . . . .   3,964,000   3,972,000   3,977,000   3,994,000   3,930,000   3,928,000   3,928,000   3,958,000
   Diluted. . . . . . . .   4,409,000   4,539,000   4,556,000   4,565,000   4,310,000   4,314,000   4,324,000   4,382,000
</TABLE>

     Net income for the fourth quarter of 2002 was $960,000 or $0.21 per diluted
share.  The 2002 results represent an increase of 39% over the fourth quarter of
2001  results of $690,000 or $0.16 per diluted share.  The primary factor in the
increased  earnings for the fourth quarter of 2002 was the significant reduction
in the Company's cost of funds on deposits.  Total interest expense declined 28%
for  the 2002 period as compared to the prior year.  Interest income was down 6%
in the fourth quarter of 2002 compared to the prior year; however, the reduction
in  interest  expense more that offset the lower interest income resulting in an
11%  increase  in  net  interest  income  for  the  quarter.  The  other primary
contributor to the higher net income for the quarter ended December 31, 2002 was
lower  overhead  costs, which decreased 8% from the prior year.  The majority of
the  decrease  was  in  salaries,  wages and benefits related primarily to bonus
accrual adjustments.  Somewhat offsetting this decrease was the higher provision
for  loan losses required in the fourth quarter of 2002 as previously discussed.

FINANCIAL  CONDITION

GENERAL
     The  Company  achieved  11% growth during the year for total assets of
$302.2  million  at  December  31, 2002 compared to $273.1 million for the prior
year  end.  The  growth  was  driven by a 6% rise in gross loans to total $218.8
million  from  $207.0  million  at  December  31, 2001.  In addition, investment
securities  increased  34%  from  $47.4 million to $63.5 million at December 31,
2002.  Asset  growth was funded by the 5% increase in deposits to $230.5 million
and  higher  FHLB  advances  which  totaled  $40.6 million at the 2002 year end.
Shareholders'  equity  totaled $28.7 million at December 31, 2002 as compared to
$24.6  million  at  December  31, 2001.  This increase was primarily a result of
retained  net  income of $3.4 million, proceeds from stock option exercises, and
an increase in the unrealized gain on available for sale securities during 2002.

CREDIT  RISK  MANAGEMENT  AND  LOANS
     Credit  risk  is  defined as the risk of loss arising from a counterparty's
failure or inability to meet payment or performance terms of a contract with the
Company.  The Company's credit risk management processes are intended to address
the  management  of  all  forms  of  credit  risk,  including  balance sheet and
off-balance  sheet exposures.  The credit risk process involves a Loan Committee
of  the  Board of Directors which is responsible for establishing and monitoring
adherence to credit policies, approving underwriting standards and concentration
limits,  and granting credit approval authorities.  Credit policies include loan
officer  and  credit  limits,  periodic documentation examination, and follow-up
procedures for any exceptions to credit policies.  The processes are intended to
ensure  that  risks are accurately assessed, properly approved, and continuously
monitored.  An  independent credit review function also monitors compliance with
credit  policies,  works  to  ensure  that  credit  due  diligence  and  credit
administration  meet  acceptable  standards,  and  is  responsible  for  the
effectiveness  of  the credit quality review process.  Loans that are determined
to  involve any more risk than the normal portfolio risk are placed on a special
review  status  and  closely  monitored.

     As  of  December  31, 2002, the Company had gross loans outstanding, net of
unearned  income,  of  $218.8  million  which  represents  an  increase of $11.8
million, or 6%, attributable to internal growth, from the 2001 outstanding loans
of $207.0 million.  Outstanding loans represent the largest component of earning
assets at 77% and 79% of average earning assets for 2002 and 2001, respectively.
For  2002,  the  Company's  loans averaged $211.7 million with a yield of 7.04%.
This  is compared to $195.6 million average loans with a yield of 8.84% in 2001.
The  decrease  in  the  loan  yield is a direct result of the rapid and dramatic
short-term  interest rate reductions experienced throughout 2001 and in 2002, as
a  majority  of  the Bank's loans adjust immediately with movements in the prime
lending  rate.  The  interest  rates  charged on loans of the Bank vary with the
degree  of  risk, maturity and amount of the loan.  Competitive pressures, money
market  rates, availability of funds, and government policy and regulations also
influence  interest rates.  Loans of the Finance Company are generally regulated
under  state  laws  which establish the maximum loan amounts and interest rates,
and  the  types and maximum amounts of fees, insurance premiums, and other costs
that  may  be  charged.

     The  loan  portfolio consists primarily of commercial and industrial loans,
commercial  loans  secured  by  real estate, loans secured by one-to-four family
residential mortgages, and consumer loans.  Substantially all of these loans are
located  in  the Upstate of South Carolina and are concentrated in the Company's
market  area.  At  December  31,  2002,  the  Company  had  no  loans for highly
leveraged  transactions  and  no  foreign  loans.  The primary focus has been on
commercial lending to small and medium-sized businesses in its marketplace.  The
Company has a diversified loan portfolio which is spread throughout a variety of
industries,  with  no  industry  or group of related industries accounting for a
significant  portion of the commercial loan portfolio, and with no dependence on
any  specific  economic  segment.  The  Company  regularly  monitors  its credit
concentrations  based  on  loan  purpose,  industry,  and  customer base.  As of
December  31,  2002, there were no material concentrations of credit risk within
the  Company's  loan  portfolio.

     The following table shows the composition of the loan portfolio at December
31  for  each  year  presented.

<TABLE>
<CAPTION>

                                                 LOAN PORTFOLIO COMPOSITION
                                                   (DOLLARS IN THOUSANDS)


                                                 2002                 2001                 2000                 1999
                                          ------------------   ------------------   ------------------   -------------------
                                           Amount    Percent    Amount    Percent    Amount    Percent    Amount    Percent
                                          --------   -------   --------   --------   -------   --------   -------   --------
<S>                                       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
Commercial and industrial. . . . . . . .  $ 30,643      14.0%  $ 35,737      17.3%  $ 31,995      17.7%  $ 26,217      17.7%
Commercial secured by real estate. . . .    77,748      35.5%    70,036      33.8%    62,709      34.7%    55,647      37.6%
Real estate - residential mortgages. . .    67,963      31.1%    64,239      31.0%    52,287      29.0%    47,366      32.0%
Real estate - construction . . . . . . .    32,791      15.0%    26,672      12.9%    23,232      12.9%    10,135       6.9%
Installment and other consumer loans . .     5,846       2.7%     6,301       3.1%     6,540       3.6%     5,402       3.6%
Consumer finance, net of unearned income     3,544       1.6%     3,606       1.7%     3,542       2.0%     3,183       2.1%
Other loans and overdrafts . . . . . . .       265       0.1%       450       0.2%       216       0.1%       220       0.1%
                                          ---------    ------  ---------   -------  ---------  --------  ---------  --------
                                           218,800       100%   207,041       100%   180,521       100%   148,170       100%
Less - Allowance for loan losses . . . .    (3,369)    ======    (2,937)    ======    (2,560)    =======   (2,163)    ======
                                          ---------            ---------            ---------            ---------
Net loans. . . . . . . . . . . . . . . .  $215,431             $204,104             $177,961             $146,007
                                          =========            =========            =========            =========

                                                 1998
                                          ------------------
                                           Amount    Percent
                                          ---------  --------
<S>                                       <C>        <C>
Commercial and industrial. . . . . . . .  $ 24,100      18.4%
Commercial secured by real estate. . . .    48,527      37.1%
Real estate - residential mortgages. . .    42,832      32.8%
Real estate - construction . . . . . . .     6,463       5.0%
Installment and other consumer loans . .     5,656       4.3%
Consumer finance, net of unearned income     2,881       2.2%
Other loans and overdrafts . . . . . . .       210       0.2%
                                          ---------  --------
                                           130,669       100%
Less - Allowance for loan losses . . . .    (1,827)  ========
                                          ---------
Net loans. . . . . . . . . . . . . . . .  $128,842
                                          =========
</TABLE>


     The  Company's  real  estate  loans are primarily owner-occupied commercial
facilities  and  other  loans  secured  by  both commercial and residential real
estate  located  within the Company's primary market area.  The Company does not
actively  pursue  long-term, fixed rate mortgage loans for retention in its loan
portfolio.  These  loans  may  be  made  on either a secured or unsecured basis.
When  taken, collateral generally consists of liens on inventories, receivables,
equipment, and furniture and fixtures.  Unsecured commercial loans are generally
short-term  with  emphasis  on repayment strengths and low debt-to-worth ratios.

     A  significant  portion  of  the  installment  and other consumer loans are
secured  by  automobiles  and other personal assets.  Consumer finance loans are
those  originated  by  the  Company's  consumer finance subsidiary.  These loans
generally  carry  a  higher  risk  of nonpayment than do the other categories of
loans,  but the increased risk is substantially offset by the smaller amounts of
such  loans and the higher rates charged thereon, as well as a higher allocation
of  the  allowance  for  loan  losses  related  to  Freedom's  loan  portfolio.

LOAN  MATURITY  AND  INTEREST  SENSITIVITY
     The  following  table  shows  the  maturity  distribution  and  interest
sensitivity  of  the  Company's  loan  portfolio  at  December  31,  2002.

<TABLE>
<CAPTION>

                          LOAN PORTFOLIO MATURITY SCHEDULE
                               (DOLLARS IN THOUSANDS)

                                           1 Year   Over 1, to     Over
                                          or Less     5 Years    5 Years    Total
                                          --------  -----------  --------  --------
<S>                                       <C>       <C>          <C>       <C>
MATURITY DISTRIBUTION:
Commercial and industrial. . . . . . . .  $ 21,570  $     8,913  $    160  $ 30,643
Commercial secured by real estate. . . .    18,480       57,796     1,472    77,748
Real estate - residential mortgages. . .    19,040       34,640    14,283    67,963
Real estate - construction . . . . . . .    26,810        5,613       368    32,791
Installment and other consumer loans . .     3,095        2,738        13     5,846
Consumer finance, net of unearned income     3,544            0         0     3,544
Other loans and overdrafts . . . . . . .       265            0         0       265
                                          --------  -----------  --------  --------
Total. . . . . . . . . . . . . . . . . .  $ 92,804  $   109,700  $ 16,296  $218,800
                                          ========  ===========  ========  ========

INTEREST SENSITIVITY:
Total of loans with:
Floating interest rates. . . . . . . . .  $ 82,957  $    57,967  $ 14,993  $155,917
Predetermined interest rates . . . . . .     9,847       51,733     1,303    62,883
                                          --------  -----------  --------  --------
Total. . . . . . . . . . . . . . . . . .  $ 92,804  $   109,700  $ 16,296  $218,800
                                          ========  ===========  ========  ========
</TABLE>

ALLOWANCE  FOR  LOAN  LOSSES  AND  NONPERFORMING  ASSETS
          The  allowance  for  loan losses is established through charges in the
form of a provision for loan losses based on management's periodic evaluation of
the  loan portfolio. Loan losses and recoveries are charged or credited directly
to  the allowance.  The amount of the allowance reflects management's opinion of
an  adequate  level  to absorb probable losses inherent in the loan portfolio at
December  31,  2002.  In  assessing the adequacy of the allowance and the amount
charged  to the provision, management relies predominately on its ongoing review
of  the  loan portfolio, which is undertaken both to ascertain whether there are
losses  which must be charged-off, and to assess the risk characteristics of the
portfolio in the aggregate as well as the credit risk associated with particular
loans.  The  Company's  methodology for evaluating the adequacy of the allowance
for  loan  losses  incorporates  management's current judgments about the credit
quality  of  the  loan  portfolio through a disciplined and consistently applied
process.  The  methodology  includes  segmentation  of  the  loan portfolio into
reasonable components based on loan purpose for calculation of the most accurate
reserve.  Appropriate reserve estimates are determined for each segment based on
a  review  of  individual loans, application of historical loss factors for each
segment, and adjustment factors applied as considered necessary.  The adjustment
factors  are  applied  consistently  and  are  quantified  for  consideration of
national  and  local  economic  conditions;  exposure to concentrations that may
exist in the portfolio; impact of off-balance sheet risk; alterations of lending
policies  and  procedures; the total amount of and changes in trends of past due
loans,  nonperforming  loans, problem loans and charge-offs; the total amount of
and  changes  in trends of the Bank's internally graded "watch list" loans which
include  classified  loans  and  OAEM;  variations  in  the  nature,  maturity,
composition,  and  growth of the loan portfolio; changes in trends of collateral
value;  entry  into  new markets; and other factors which may impact the current
credit  quality  of  the  loan  portfolio.

     The table below presents an allocation of the allowance for loan losses for
each  of the years ended December 31 by the different loan categories.  However,
the  breakdown  is  based  on  a  number  of qualitative factors and the amounts
presented are  not  necessarily  indicative of actual amounts which will be
charged to any particular  category.

<TABLE>
<CAPTION>

                                              ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
                                                      (DOLLARS IN THOUSANDS)

                                      2002                     2001                      2000                       1999
                             -----------------------   -----------------------   ----------------------  ------------------------
                                         Percent of                Percent of                Percent of                Percent of
                             Allowance    Loans in     Allowance    Loans in     Allowance    Loans in     Allowance    Loans in
                            Break-down    Category    Break-down    Category    Break-down    Category    Break-down    Category
                            -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                         <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Commercial . . . . . . . .  $     1,802        49.5%  $     1,365        51.1%  $     1,011        52.4%  $       879        55.3%
Real estate - residential
mortgage . . . . . . . . .          722        31.1%          746        31.0%          741        29.0%          692        32.0%
Real estate - construction          317        15.0%          375        12.9%          330        12.9%          148         6.9%
Installment and consumer
Finance and other loans. .          482         4.4%          440         5.0%          337         5.7%          331         5.8%
Unallocated. . . . . . . .           46                        11                       141                       113
                            -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                            $     3,369         100%  $     2,937         100%  $     2,560         100%  $     2,163         100%
                            ===========  ===========  =========== ============  ===========  ===========  ===========  ===========

                                      1998
                            -----------------------
                                         Percent of
                             Allowance    Loans in
                            Break-down    Category
                            -----------  -----------
<S>                         <C>          <C>
Commercial . . . . . . . .  $       771        55.5%
Real estate - residential
mortgage . . . . . . . . .          599        32.8%
Real estate - construction           90         5.0%
Installment and consumer
Finance and other loans. .          275         6.7%
Unallocated. . . . . . . .           92
                            -----------  -----------
                            $     1,827         100%
                            ===========  ===========
</TABLE>


      Management  maintains  an  allowance for loan losses which it believes
adequate to cover probable losses in the loan portfolio.  It must be emphasized,
however,  that  the  determination  of  the  allowance for loan losses using the
Company's  procedures  and  methods rests upon various judgments and assumptions
about  future  economic  conditions,  events,  and other factors affecting loans
which  are  believed  to  be  reasonable,  but which may or may not prove valid.
While  it  is the Company's policy to provide for the loan losses in the current
period  in  which  a  loss is considered probable, there are additional risks of
future  losses  which cannot be quantified precisely or attributed to particular
loans  or  classes  of  loans.  Because  these  risks  include  the state of the
economy,  industry  trends,  and  conditions  affecting  individual  borrowers,
management's judgment of the allowance is necessarily approximate and imprecise.
No  assurance  can  be  given that the Company will not in any particular period
sustain  loan  losses  which  would  be  sizable  in  relationship to the amount
reserved  or  that  subsequent  evaluation  of  the  loan portfolio, in light of
conditions  and factors then prevailing, will not require significant changes in
the  allowance for loan losses or future charges to earnings.  The allowance for
loan  losses  is  also  subject to review by various regulatory agencies through
their  periodic  examinations  of  the Company's subsidiaries.  Such examination
could  result  in  required  changes  to  the  allowance  for  loan  losses.  No
adjustment  in the allowance or significant adjustments to the Bank's internally
classified  loans  were  made  as a result of the Bank's most recent examination
performed  by  the  Office  of  the  Comptroller  of  the  Currency.

     The  allowance  for  loan  losses  totaled  $3.4 million, or 1.54% of total
loans,  at  the  end  of 2002.  This is compared to a $2.9 million allowance, or
1.42%  of  total  loans,  at December 31, 2001.  For the year ended December 31,
2002, the Company reported consolidated net charge-offs of $415,000, or 0.20% of
average loans.  This is compared to consolidated net charge-offs of $348,000, or
0.18%  of  average  loans,  for the year ended December 31, 2001.  The following
table  sets  forth  certain information with respect to changes in the Company's
allowance  for  loan  losses  for  the  last  five  years.

<TABLE>
<CAPTION>


(dollars in thousands)              2002     2001     2000     1999     1998
---------------------------------  -------  -------  -------  -------  -------
<S>                                <C>      <C>      <C>      <C>      <C>

Balance at beginning of period. .  $2,937   $2,560   $2,163   $1,827   $1,728
                                   -------  -------  -------  -------  -------
Charge-offs:
Commercial and industrial . . . .     179        -        -       74       26
Commercial real estate. . . . . .      13      130      125        -        -
Installment and consumer. . . . .     455      358      309      343      382
                                   -------  -------  -------  -------  -------
                                      647      488      434      417      408
                                   -------  -------  -------  -------  -------
Recoveries:
Commercial and industrial . . . .      16        -       50       51       25
Commercial real estate. . . . . .      78       31        -        -        -
Installment and consumer. . . . .     138      109      127      257      192
                                   -------  -------  -------  -------  -------
                                      232      140      177      308      217
                                   -------  -------  -------  -------  -------
Net charge-offs . . . . . . . . .    (415)    (348)    (257)    (109)    (191)
Provision charged to expense. . .     847      725      654      445      290
                                   -------  -------  -------  -------  -------
Balance at end of period. . . . .  $3,369   $2,937   $2,560   $2,163   $1,827
                                   =======  =======  =======  =======  =======
Net charge-offs to average loans.     .20%     .18%     .16%     .08%     .16%
                                   =======  =======  =======  =======  =======
Allowance to loans, year end. . .    1.54%    1.42%    1.42%    1.46%    1.40%
                                   =======  =======  =======  =======  =======
Net charge-offs to allowance. . .   12.32%   11.85%   10.04%    5.04%   10.45%
                                   =======  =======  =======  =======  =======
</TABLE>

          The  Company's  nonperforming  assets  consist of loans on non-accrual
basis,  loans which are contractually past due 90 days or more on which interest
is  still  being  accrued,  troubled  debt restructurings, and other real estate
owned  ("OREO").  Loans  past due 90 days and greater totaled $187,000, or 0.09%
of  gross  loans,  at  December 31, 2002 compared to $153,000, or 0.07% of gross
loans,  at  December  31,  2001.  Loans  on  non-accrual  totaled  $293,000  and
$1,180,000,  respectively,  at  December 31, 2002 and 2001.  Generally, loans of
the  Bank  are  placed  on non-accrual status at the earlier of when they are 90
days past due or when the collection of the loan becomes doubtful.  Loans of the
Finance Company are not classified as non-accrual, but are charged-off when such
become  150  days  contractually  past  due  or  earlier  if  the loan is deemed
uncollectible.  The  following  table  summarizes  the  nonperforming  assets at
December  31  for  each  year  presented.

<TABLE>
<CAPTION>

(dollars in thousands)                 2002    2001     2000    1999    1998
------------------------------------  ------  -------  ------  ------  ------
<S>                                   <C>     <C>      <C>     <C>     <C>

Non-accrual loans. . . . . . . . . .  $ 293   $1,180   $ 218   $ 147   $   0
Loans past due 90 days or more . . .    187      153     122     130     483
Troubled debt restructurings . . . .      0        0       0       0       0
Other real estate owned. . . . . . .      0        0       0       0       0
                                      ------  -------  ------  ------  ------
Total nonperforming assets . . . . .  $ 480   $1,333   $ 340   $ 277   $ 483
                                      ======  =======  ======  ======  ======
Nonperforming assets to total loans.    .22%     .64%    .19%    .19%    .36%
                                      ======  =======  ======  ======  ======
</TABLE>


          At  December  31,  2002,  there are no loans considered to be impaired
under  Statement  of Financial Accounting Standards ("SFAS") 114, "Accounting by
Creditors  for  Impairment of a Loan".  At December 31, 2001, the carrying value
of loans that are considered to be impaired under SFAS 114 totaled $1.0 million,
which was included in the total non-accrual loans at that date.  At December 31,
2000,  the carrying value of loans that are considered to be impaired under SFAS
114  totaled  $1.5 million, which includes the $218,000 non-accrual loan at that
date.  There  were no impaired loans at December 31 for any other year presented
and  there  was  no  allowance on impaired loans required in any year presented.

     Management  maintains  a  list  of  potential  problem loans which includes
non-accrual  loans, loans past due in excess of 90 days which are still accruing
interest,  and  other  loans  which  are  credit  graded  (either internally, by
external  audits  or  regulatory  examinations) as "substandard", "doubtful", or
"loss".  A  loan  is  added  to  the  list  when  management  becomes  aware  of
information about possible credit problems of borrowers that causes doubts as to
the  ability  of such borrowers to comply with the current loan repayment terms.
The  total  amount  of  loans  outstanding at December 31, 2002 determined to be
potential  problem loans based upon management's internal designations, was $3.1
million  or  1.4% of the loan portfolio at year end, compared to $2.5 million or
1.2%  of  the  loan  portfolio  at  December  31, 2001.  The amount of potential
problem  loans  at December 31, 2002 does not represent management's estimate of
potential  losses  since  the  majority  of such loans are considered adequately
secured  by  real  estate  or  other  collateral.  The increase in the amount of
classified  loans  in  2002 is primarily related to the deterioration of general
economic  conditions during 2001 and 2002 and management's proactive approach to
more  closely  monitor credits.  Management believes that the allowance for loan
losses  as of December 31, 2002 was adequate to absorb any losses related to the
nonperforming  loans  and  potential  problem loans as of that date.  Management
continues  to  monitor closely the levels of nonperforming and potential problem
loans, and will address the weaknesses in these credits to enhance the amount of
ultimate  collection  or  recovery  on  these  assets.  Should  increases in the
overall  level  of nonperforming and potential problem loans accelerate from the
current  trend,  management  will  adjust  the  methodology  for determining the
allowance  for  loan  losses  and  will  increase  the provision for loan losses
accordingly.  This  would  likely  decrease  net  income.

INVESTMENT  SECURITIES
     At  December  31,  2002,  the  Company's  total investment portfolio had an
estimated  fair  value  of  $63.5  million, which is an increase of 34% from the
$47.4  million  invested  as  of  the  end  of  2001.  At the 2002 year end, the
portfolio  had a weighted average life of approximately 6.5 years and an average
duration  of  4.9  years.  Investment securities averaged $52.2 million yielding
5.81%  in  2002,  compared  to the 2001 average of $40.2 million yielding 6.49%.
Securities are the second largest earning asset of the Company at 19% and 16% of
average  earning  assets  for  2002  and  2001,  respectively.

     The  Company's  investment  portfolio  consists  primarily of securities of
United  States  government  agencies,  mortgage-backed securities, and state and
municipal  obligations.  The  investment  portfolio  is  designed  to  enhance
liquidity  while  providing  acceptable  rates  of  return  and minimizing asset
quality  risk.  Decisions  involving  securities  are  based  upon  management's
expectations  of  interest  rate  movements,  overall  market  conditions,  the
composition and structure of the balance sheet, and an analysis of the financial
impacts  of  alternative  rate  and  maturity  scenarios.  The  Company does not
purchase  or  hold  securities for trading purposes.  However, securities may be
sold  prior  to  their  maturity  as  all securities in the Bank's portfolio are
classified  as  "available for sale" and recorded on the Company's balance sheet
at  estimated  fair  value.  There  are  no  investments  classified as "held to
maturity" or "trading" pursuant to SFAS 115, "Accounting for Certain Investments
in  Debt  and  Equity  Securities".

     The  following  table  sets forth the amortized cost and the estimated fair
market  value  of the investment securities of the Company at December 31, 2002,
2001,  and  2000.

<TABLE>
<CAPTION>

                                   SECURITY PORTFOLIO COMPOSITION
                                       (DOLLARS IN THOUSANDS)


                                     2002                   2001                    2000
                              ----------------------  ----------------------  ---------------------
<S>                           <C>         <C>         <C>         <C>         <C>         <C>
                                          Estimated               Estimated               Estimated
                              Amortized    Fair        Amortized   Fair        Amortized   Fair
                               Cost        Value       Cost        Value       Cost        Value
Available for Sale:. . . . .  ----------  ----------  ----------  ----------  ----------  ----------
    U.S. government agencies  $   18,609  $   18,822  $   11,103  $   11,214  $   17,167  $   17,241
    Mortgage-backed. . . . .      27,321      27,743      21,716      21,660       5,642       5,666
    State and municipal. . .      16,567      16,899      14,253      14,526       9,584       9,538
                              ----------  ----------  ----------  ----------  ----------  ----------
                              $   62,497  $   63,464  $   47,072  $   47,400  $   32,393  $   32,445
                              ==========  ==========  ==========  ==========  ==========  ==========
</TABLE>


     The  Company  also maintains certain investments in stock as required to be
owned  by  the  Bank  at  December  31  as  follows:
<TABLE>
<CAPTION>


(dollars in thousands)                     2002    2001    2000
                                          ------  ------  ------
<S>                                       <C>     <C>     <C>

Federal Home Loan Bank of Atlanta stock.  $2,030  $1,345  $1,000
Federal Reserve Bank stock . . . . . . .     255     255     255
Bankers Bank of Atlanta stock. . . . . .     133     133     133
                                          ------  ------  ------
                                          $2,418  $1,733  $1,388
                                          ======  ======  ======

</TABLE>

     The  amount  of  Federal  Reserve  Bank  stock owned is based on the Bank's
capital  levels.  The  amount  of Federal Home Loan Bank ("FHLB") stock owned is
determined  based  on  the  Bank's  balances  of residential and commercial real
estate  mortgages  and  the  level  of  advances from the FHLB.  No ready market
exists  for  these  stocks  and  they  have  no  quoted  market value.  However,
redemption of these stocks has historically been at par value.  Accordingly, the
carrying  amounts  are  deemed  to  be  a  reasonable  estimate  of  fair value.

     The  following  table indicates the estimated fair value of each investment
security  category  by  maturity  as of December 31, 2002.  The weighted average
yield  for  each  range  of  maturities at December 31, 2002 is also shown.  All
securities  are  classified  as "Available for Sale" as defined in SFAS No. 115.


<TABLE>
<CAPTION>

                                           SECURITY PORTFOLIO MATURITY SCHEDULE
                                                  (DOLLARS IN THOUSANDS)

                                              After 1, Within     After 5, Within
                              Within 1 Year      5 Years             10 Years         After 10 Years          Total
                            ---------------  ----------------   ------------------  -----------------   -----------------
                                   Weighted          Weighted            Weighted            Weighted            Weighted
                            Fair   Average    Fair    Average    Fair     Average    Fair     Average    Fair     Average
                            Value   Yield    Value     Yield     Value     Yield     Value     Yield     Value     Yield
                            -----  --------  ------  ---------  -------  ---------  -------  ---------  -------  ---------
<S>                         <C>    <C>       <C>     <C>        <C>      <C>        <C>      <C>        <C>      <C>
U. S. Government agencies.      -         -  $9,259      4.83%  $ 9,563      5.14%        -         -   $18,822      4.99%
Mortgage-backed. . . . . .      -         -     692      6.49%    6,513      4.33%   20,538      4.95%   27,743      4.85%
State and municipal (1). .      -         -       -         -       324      7.06%   16,575      6.96%   16,899      6.96%
                            -----  --------  ------  ---------  -------  ---------  -------  ---------  -------  ---------
     Total . . . . . . . .      -         -  $9,951      4.95%  $16,400      4.86%  $37,113      5.84%  $63,464      5.46%
                            =====  ========  ======  =========  =======  =========  =======  =========  =======  =========
<FN>
 (1)  -  Yields  have  been  adjusted  to  a  tax  equivalent  basis  assuming  a  34%  Federal  tax  rate.
</TABLE>

     The  weighted  average  yields  shown  in the previous table are calculated
using  historical  cost balances and effective yields for the scheduled maturity
of  each security.  The yield calculations do not give effect to changes in fair
value  that  are  reflected  as  a  component  of shareholders' equity.  Certain
securities  contain  call  provisions  which  could  decrease  their anticipated
maturity.  Certain  securities  also  contain  rate  adjustment provisions which
could  either  increase  or  decrease  their  yields.

DEPOSITS  AND  OTHER  INTEREST-BEARING  LIABILITIES
     The  Company has a large, stable base of deposits, principally money market
accounts  and certificates of deposit obtained primarily from customers in South
Carolina.  The  Company's  core deposit base consists of consumer and commercial
money  market  accounts, checking accounts, savings and retirement accounts, NOW
accounts,  and non-jumbo time deposits (less than $100,000).  Although such core
deposits continue to be interest-sensitive for both the Company and the industry
as  a whole, these deposits provide the Company with a reliable source of funds.
The  Company  closely  monitors  its reliance on certificates of deposit greater
than $100,000, which are generally considered less stable and more interest rate
sensitive  than  core  deposits.  Certificates  of deposit in excess of $100,000
represented  21%  and  19%, respectively, of total deposits at December 31, 2002
and  2001.  At  December 31, 2002 and 2001, the Company had no brokered deposits
or  foreign  deposits.

     During  2002,  interest-bearing liabilities averaged $230.3 million with an
average  rate  of 2.68% compared to $211.2 million with an average rate of 4.64%
in  2001.  The decrease in the average rate reflects the general decreasing rate
environment experienced throughout 2001 and 2002, combined with the repricing of
maturing  time  deposits  and  FHLB  advances to lower current market rates.  In
pricing  deposits,  the  Company  considers its liquidity needs, the anticipated
direction and levels of interest rates and local market conditions.  At December
31,  2002,  interest-bearing  deposits  comprised  approximately  86%  of  total
deposits  and 83% of total interest-bearing liabilities.  Federal Home Loan Bank
advances  comprise  the  remainder  of  interest-bearing  liabilities.

     The  Company  uses  its deposit base as a primary source with which to fund
earning assets.  Deposits increased 5% from  $218.8 million at December 31, 2001
to  $230.5  million  as  of  year  end 2002.  The increase was primarily in time
deposit  accounts  which  were  somewhat  offset  by  decreases  in money market
accounts.  Noninterest-bearing  deposits  averaged 13% of total average deposits
for  the  year 2002 compared to 12% in 2001.  The Company faces continuing stiff
competition  from  other  banking  and financial services companies in gathering
deposits.  As  the percentage of funding provided by depositors decreases, other
sources, such as FHLB advances and short-term borrowings, have been developed to
fund  loan demand and increases in investment securities.  The Company considers
advances  from  the  FHLB to be a reliable and readily available source of funds
and  utilizes these advances in its asset-liability management and interest rate
risk  management  strategies.  Advances  from  the FHLB increased 51% during the
year  to  total  $40.6 million at December 31, 2002 compared to $26.9 million at
the  prior  year  end.

     The  following  is  a detailed breakout of the Company's deposit base as of
December  31 of each year presented and the percent of deposits in each category
as  of  year  end.

<TABLE>
<CAPTION>

(dollars in thousands)             2002                    2001                    2000                    1999
----------------------     -----------------------  ----------------------  ---------------------  -----------------------
                                       Percent of              Percent of              Percent of              Percent of
                                      Deposits in             Deposits in             Deposits in             Deposits in
                            Balance     Category    Balance     Category    Balance     Category    Balance     Category
                            --------  ------------  --------  ------------  --------  ------------  --------  ------------
<S>                         <C>       <C>           <C>       <C>           <C>       <C>           <C>       <C>
Noninterest-bearing demand  $ 33,342         14.4%  $ 29,372         13.5%  $ 35,468         17.0%  $ 23,823         15.1%
Interest-bearing demand. .    24,943         10.8%    21,807          9.9%    14,641          7.0%    14,073          8.9%
Savings and money market .    73,933         32.1%    85,388         39.0%    63,821         30.5%    50,845         32.2%
Time deposits, $100,000
and over . . . . . . . . .    48,791         21.2%    41,798         19.1%    46,523         22.2%    28,459         18.0%
Other time deposits. . . .    49,506         21.5%    40,413         18.5%    48,738         23.3%    40,796         25.8%
                            --------  ------------  --------  ------------  --------  ------------  --------  ------------
                            $230,515        100.0%  $218,778        100.0%  $209,191        100.0%  $157,996        100.0%
                            ========  ============  ========  ============  ========  ============  ========  ============

                                     1998
                           ----------------------
                                       Percent of
                                      Deposits in
                            Balance     Category
                           ---------  ------------
<S>                         <C>       <C>
Noninterest-bearing demand  $ 20,877         14.9%
Interest-bearing demand. .     8,541          6.1%
Savings and money market .    50,047         35.7%
Time deposits, $100,000
and over . . . . . . . . .    20,633         14.7%
Other time deposits. . . .    40,145         28.6%
                            --------  ------------
                            $140,243        100.0%
                            ========  ============
</TABLE>

     The  maturity distribution of certificates of deposit greater than or equal
to  $100,000  as  of  December  31,  2002  is as follows (dollars in thousands):

<TABLE>
<CAPTION>

<S>                                                  <C>
3 months or less. . . . . . . . . . . . . . . . . .  $23,572
Greater than 3, but less than or equal to 6 months.    6,183
Greater than 6, but less than or equal to 12 months   13,773
Greater than 12 months. . . . . . . . . . . . . . .    5,263
                                                     -------
                                                     $48,791
                                                     =======
</TABLE>

CAPITAL  MANAGEMENT

          The  Company's  capital  serves  to  support  asset growth and provide
protection  against  loss  to  depositors and creditors.  The Company strives to
maintain  an  optimal  level  of capital, commensurate with its risk profile, on
which  an attractive return to shareholders will be realized over both the short
and  long-term,  while  serving  depositors',  creditors'  and regulatory needs.
Total  shareholders'  equity amounted to $28.7 million, or 9.5% of total assets,
at  December  31,  2002.  This  is  compared  to $24.6 million, or 9.0% of total
assets,  at December 31, 2001.  The $4.1 million increase in total shareholders'
equity resulted principally from retention of earnings, stock issued pursuant to
the  Company's  stock  option  plans,  and  the  increase  in unrealized gain on
investment  securities available for sale during the year.  Book value per share
at December 31, 2002 and 2001 was $7.16 and $6.18, respectively.  On December 5,
2002,  the  Company  issued  its  eleventh  consecutive  5%  stock  dividend  to
shareholders  of  record as of November 22, 2002.  This dividend resulted in the
issuance of approximately 190,000 shares of the Company's $1.00 par value common
stock.  Weighted  average  share and per share data has been restated to reflect
all  stock  dividends  issued.

     To  date,  the  capital  needs  of  the  Company  have been met through the
retention  of  earnings,  from  the  proceeds  of its initial offering of common
stock,  and  from  the  proceeds of stock issued pursuant to the Company's stock
option  plans.  The  Company  believes  that  the  rate of asset growth will not
negatively impact the capital base.  The Company has no commitments or immediate
plans  for  any significant capital expenditures outside of the normal course of
business.  The  Company's  management  does  not  know  of any trends, events or
uncertainties  that  may  result  in  the Company's capital resources materially
increasing  or  decreasing.

     The  Company  and  the  Bank  are  subject  to  various  regulatory capital
requirements administered by the federal banking agencies.  The purpose of these
regulations  is  to quantitatively measure capital against risk-weighted assets,
including  certain  off-balance  sheet  items.  These  regulations  define  the
elements  of  total  capital  and  establish minimum ratios for capital adequacy
purposes.  To  be  categorized  as "well capitalized", as defined in the Federal
Deposit  Insurance  Corporation  Improvement  Act  of  1991  ("FDICIA"),  Summit
Financial  and  its  banking subsidiary must maintain a risk-based Total Capital
ratio  of  at least 10%, a risk-based Tier 1 Capital ratio of at least 6%, and a
Tier 1 Leverage ratio of at least 5%, and not be subject to a written agreement,
order,  or  capital directive with any of its regulators.  At December 31, 2002,
the  Company  and  the  Bank  exceeded  all  regulatory required minimum capital
ratios,  and  satisfied  the  requirements  of  the  well  capitalized  category
established  by  FDICIA.  The  following table summarizes capital ratios for the
Company  and  the  Bank  at  December  31,  2002  and  2001.

<TABLE>
<CAPTION>


                                THE COMPANY           THE BANK
                           --------------------  --------------------
                           12/31/02   12/31/01   12/31/02   12/31/01
                           ---------  ---------  ---------  ---------
<S>                        <C>        <C>        <C>        <C>

Total risk-based capital.     13.20%     12.41%     11.69%     11.00%
Tier 1 risk-based capital     11.95%     11.16%     10.44%      9.75%
Tier 1 leverage capital .      9.70%      9.25%      8.48%      8.07%
</TABLE>

RETURN  ON  EQUITY  AND  ASSETS
     The  return  on  average  shareholders' equity ratio (net income divided by
average total equity) and the return on average assets ratio (net income divided
by  average  total assets) for the years ended December 31, 2002, 2001, and 2000
are  presented in the following table.  The Company has not paid a cash dividend
since  its  inception.  The  holders  of  common  stock  are entitled to receive
dividends when and as declared by the Board of Directors.  The Company's present
policy  is  to  retain  all earnings for the operation of the Company until such
time  as  future  earnings  support  cash  dividend  payments.

<TABLE>
<CAPTION>

                                                For the Year Ended
                                                  December 31,
                                              ---------------------
                                               2002    2001    2000
                                              ------  ------  -----
<S>                                           <C>     <C>     <C>
Return on average assets . . . . . . . . . .   1.19%   1.03%   1.25%
Return on average shareholders' equity . . .  13.02%  11.71%  13.57%
Average shareholders' equity as a percent of
  average assets . . . . . . . . . . . . . .   9.15%   8.80%   9.22%
</TABLE>


MARKET  RISK  AND  ASSET-LIABILITY  MANAGEMENT

          The  Company's  primary  earnings  source  is its net interest income;
therefore, the Company devotes significant time and has invested in resources to
assist  in  the management of market risk.  The Company's net interest income is
affected  by  changes in market interest rates, and by the level and composition
of earning assets and interest-bearing liabilities.  The Company's objectives in
its  asset-liability  management  are  to  utilize  its  capital effectively, to
provide adequate liquidity and enhance net interest income, without taking undue
risks  or  subjecting  the  Company  unduly  to interest rate fluctuations.  The
Company  takes  a  coordinated  approach  to  the  management  of  its  capital,
liquidity,  and  interest  rate  risk.

     Market  risk  is the risk of loss from adverse changes in market prices and
rates.  The  Company's  market  risk  arises principally from interest rate risk
inherent  in  its  lending,  investment,  deposit,  and  borrowing  activities.
Management actively monitors and manages its interest rate risk exposure.  Other
types  of  market risks, such as foreign currency exchange rate risk, and equity
and  commodity  price  risk,  do not arise in the normal course of the Company's
business.

     Interest  rate  risk  is  the exposure to changes in market interest rates.
The  major  source  of the Company's interest rate risk is the difference in the
maturity  and  repricing  characteristics  between  core  banking  assets  and
liabilities - loans and deposits.  This difference, or mismatch, poses a risk to
net  interest income.  The Company attempts to control the mix and maturities of
assets  and  liabilities  to  maintain  a reasonable balance between exposure to
interest  rate fluctuations and earnings and to achieve consistent growth in net
interest income, while maintaining adequate liquidity and capital.  A sudden and
substantial  increase  or  decrease  in  interest rates may adversely impact the
Company's  earnings  to the extent that the interest rates on earning assets and
interest-bearing  liabilities  do  not  change  at  the  same speed, to the same
extent,  or  on  the  same  basis.

     The  Company  monitors  the  interest rate sensitivity of its balance sheet
position  and controls this risk by identifying and quantifying exposures in its
near-term  sensitivity  through  the  use of simulation and valuation models, as
well  as  its  long-term gap position, reflecting the known or assumed maturity,
repricing,  and  other cash flow characteristics of assets and liabilities.  The
Company's  simulation analysis involves dynamically modeling interest income and
expense  from  current assets and liabilities over a specified time period under
various  interest  rate  scenarios  and  balance  sheet structures, primarily to
measure  the  sensitivity  of net interest income over relatively short (e.g.,
less   than  2-year)  time   horizons.
As  the  future  path   of  interest  rates  cannot  be  known  in advance,
management  uses  simulation  analysis  to  project  earnings  under  various
interest  rate  scenarios  including  reasonable  or  "most  likely", as well as
deliberately  extreme and perhaps unlikely, scenarios.  Key assumptions in these
simulation  analyses  relate  to  the  behavior  of  interest rates and spreads,
changes in the mix and volume of assets and liabilities, repricing and/or runoff
of  deposits,  and,  most importantly, the relative sensitivity of the Company's
assets  and  liabilities  to  changes  in  market interest rates.  This relative
sensitivity  is important to consider as the Company's core deposit base has not
been  subject to the same degree of interest rate sensitivity as its assets, the
majority  of  which  are  based  on  external indices and change in concert with
market  interest  rates.  According  to  the  model,  the  Company  is presently
positioned  so  that  net  interest  income  will  increase in the short-term if
interest  rates  rise  and  will  decrease  in  the short-term if interest rates
decline.

     A  traditional  gap  analysis  is  also  prepared based on the maturity and
repricing characteristics of earning assets and interest-bearing liabilities for
selected  time  bands.  The  mismatch  between repricings or maturities within a
time  band is commonly referred to as the "gap" for that period.  A positive gap
(asset  sensitive)  where  interest  rate  sensitive assets exceed interest rate
sensitive  liabilities  generally  will  result  in  the  net  interest  margin
increasing  in  a  rising  rate  environment  and  decreasing  in a falling rate
environment.  A  negative  gap  (liability  sensitive)  will  generally have the
opposite  result  on net interest income.  However, the traditional gap analysis
does not assess the relative sensitivity of assets and liabilities to changes in
interest  rates  and  other  factors  that could have an impact on interest rate
sensitivity  or net interest income, and is thus not, in management's opinion, a
true  indicator  of  the  Company's  interest  rate  sensitivity  position.

     The  Company's  balance  sheet  structure is primarily short-term in nature
with  a  substantial portion of assets and liabilities maturing within one year.
The  Company's  gap analysis, presented below, indicates a negative 12 month gap
as  of  December 31, 2002 of $40.3 million.  However, when the "effective change
ratio"  (the  historical relative movement of each asset's and liability's rates
in  relation  to  a  100 basis point change in the prime rate) is applied to the
interest  gap  position, the Company is actually asset sensitive over a 12 month
period  and  the  entire repricing lives of the assets and liabilities.  This is
primarily  due  to  the  fact  that in excess of 60% of the loan portfolio moves
immediately on a one-to-one ratio with a change in the prime lending rate, while
the  deposit rates do not increase or decrease as much or as quickly relative to
a prime rate movement.  The Company's asset sensitive position means that assets
reprice  faster  than the liabilities, which causes a decrease in the short-term
in the net interest income and net interest margin in periods of declining rates
as experienced in 2001, until the fixed rate deposits mature and are repriced at
then  lower current market rates, thus narrowing the difference between what the
Company  earns  on  its  assets  and what it pays on its liabilities.  Given the
Company's  current  balance  sheet  structure,  the opposite effect (that is, an
increase  in  net  interest  income  and net interest margin) is realized in the
short-term  in  a  rising  rate environment.  The following is the Company's gap
analysis  as  of  December  31,  2002  (dollars  in  thousands).

<TABLE>
<CAPTION>

                                          ASSETS  AND  LIABILITIES  REPRICING  WITHIN
                                      --------------------------------------------------
                                      3 MONTHS    4 TO 12     1 TO 5   OVER 5
                                       OR LESS     MONTHS     YEARS     YEARS    TOTAL
                                      ---------  ----------  --------  -------  --------
<S>                                   <C>        <C>         <C>       <C>      <C>
EARNING ASSETS:
Loans, net of unearned income. . . .  $ 147,312  $   7,597   $62,566   $ 1,325  $218,800
Investment securities  (1) . . . . .          -          -     9,951    55,931    65,882
Federal funds sold and other . . . .      4,667          -         -         -     4,667
                                      ---------  ----------  --------  -------  --------
   Total . . . . . . . . . . . . . .    151,979      7,597    72,517    57,256   289,349
                                      ---------  ----------  --------  -------  --------
INTEREST-BEARING LIABILITIES:
Demand deposits  (2) . . . . . . . .     98,876          -         -         -    98,876
Time deposits, $100,000 and over . .     23,572     19,956     5,263         -    48,791
Other time deposits. . . . . . . . .     14,915     27,066     7,494        31    49,506
FHLB advances and other. . . . . . .      5,900      9,600    20,100     5,000    40,600
                                      ---------  ----------  --------  -------  --------
   Total . . . . . . . . . . . . . .    143,263     56,622    32,857     5,031   237,773
                                      ---------  ----------  --------  -------  --------
Period interest sensitivity gap. . .  $   8,716   ($49,025)  $39,660   $52,225  $ 51,576
                                      =========  ==========  ========  =======  ========
Cumulative interest sensitivity gap.  $   8,716   ($40,309)    ($649)  $51,576
                                      =========  ==========  ========  =======
<FN>

(1)  -  Presented  at  market  value  as  all  investment  securities  are classified as
"available  for  sale"; includes the Bank's investment in stock of Federal Reserve Bank,
Federal  Home  Loan  Bank,  and  other  equities.
(2)  -  Includes  interest-bearing  checking  accounts, money market accounts,
and  regular  savings  accounts.
</TABLE>

          The  Company  monitors  and  considers  methods  of  managing the rate
sensitivity  and  repricing  characteristics  of the balance sheet components in
order  to minimize the impact of sudden and sustained changes in interest rates.
Accordingly, the Company also performs a valuation analysis involving projecting
future  cash flows from current assets and liabilities to determine the Economic
Value  of  Equity  ("EVE")  which  is  the  estimated net present value of those
discounted  cash  flows.  EVE represents the market value of equity and is equal
to  the  market  value  of  assets  minus  the market value of liabilities, with
adjustments  made  for  certain off-balance sheet items, over a range of assumed
changes  in  market  interest  rates.  The  sensitivity of EVE to changes in the
level of interest rates is a measure of the sensitivity of long-term earnings to
changes  in  interest  rates,  and  is used primarily to measure the exposure of
earnings and equity to changes in interest rates over a relatively long (e.g.,
greater than 2  years)  time  horizon.

     The  Company's  market  risk  exposure  is  measured  using  interest  rate
sensitivity  analysis  by  computing  estimated changes in EVE in the event of a
range  of  assumed changes in market interest rates.  This analysis assesses the
risk  of  loss in market risk sensitive instruments in the event of a sudden and
sustained  100  -  300  basis points increase or decrease in the market interest
rates.  The  Company's  Board  of  Directors  has  adopted an interest rate risk
policy  which  establishes  maximum allowable decreases in EVE in the event of a
sudden  and  sustained  increase  or  decrease  in  market  interest rates.  The
following  table  presents the Company's projected change in EVE for the various
rate shock levels as of year end.  At December 31, 2002, the Company's estimated
changes  in  EVE  were  within  the  limits  established  by  the  Board.

<TABLE>
<CAPTION>

(dollars in thousands)               DECEMBER 31, 2002     DECEMBER 31, 2001
----------------------            ----------------------  -------------------
                                    ECONOMIC              ECONOMIC
                          POLICY    VALUE OF    PERCENT   VALUE OF    PERCENT
CHANGE IN INTEREST RATES   LIMIT     EQUITY     CHANGE     EQUITY     CHANGE
------------------------  -------  ----------  --------  ----------  --------
<S>                       <C>      <C>         <C>       <C>         <C>

300 basis point rise . .   40.00%  $   25,285    12.03%  $   21,480    12.69%
200 basis point rise . .   25.00%  $   26,779     6.83%  $   22,369     9.07%
100 basis point rise . .   10.00%  $   28,214     1.84%  $   23,457     4.65%
No change. . . . . . . .    0.00%  $   28,742     0.00%  $   24,601     0.00%
100 basis point decline.   10.00%  $   28,544     0.69%  $   25,228     2.55%
200 basis point decline.   25.00%  $   28,171     1.99%  $   25,102     2.04%
300 basis point decline.   40.00%  $   27,414     4.62%  $   24,864     1.07%
</TABLE>

LIQUIDITY  RISK  MANAGEMENT

     Liquidity  risk  is  defined as the risk of loss arising from the Company's
inability  to  meet  known near-term and projected long-term funding commitments
and  cash  flow  requirements.  The objective of liquidity risk management is to
ensure  the  ability  of  the  Company to meet its financial obligations.  These
obligations  are  the  payment  of  deposits  on  demand or at their contractual
maturity;  the  repayment  of  borrowings  as  they mature; the payment of lease
obligations  as  they  become due; the ability to fund new and existing loan and
other  commitments;  the  payment of operating expenses; and the ability to take
advantage  of  new  business  opportunities.  Liquidity  is  achieved  by  the
maintenance  of  assets  which can easily be converted to cash; a strong base of
core  customer  deposits;  maturing  short-term  assets;  the  ability  to  sell
marketable  securities;  and  access  to  borrowed  funds  and  capital markets.
Liquidity  is  measured  and monitored frequently at both the parent company and
the  Bank  levels, allowing management to better understand and react to balance
sheet  trends.  A  comprehensive  liquidity  analysis  provides  a  summary  of
anticipated  changes  in  loans, core deposits, and wholesale funds.  Management
also  maintains  a detailed liquidity contingency plan designed to respond to an
overall  decline  in the condition of the banking industry or a problem specific
to  the  Company.

     Liquid  assets  consist  primarily  of  cash  and  due  from  banks,
interest-bearing deposits at banks, federal funds sold, and unpledged investment
securities  available  for  sale,  which accounted for 15% of average assets for
each  of  the years ended December 31, 2002 and 2001.  Investment securities are
an  important tool to the Company's liquidity management.  Securities classified
as  available  for  sale  may  be sold in response to changes in interest rates,
liquidity  needs,  and/or  significant  prepayment  risk.  The Company's primary
sources  of  liquidity  include  cash  flow  from  operations,  core  deposits,
borrowings,  and short-term liquid assets.  In management's opinion, the Company
maintains adequate levels of liquidity by retaining sufficient liquid assets and
assets  which  can  be  easily  converted into cash and by maintaining access to
various  sources  of  funds.  The primary sources of funds available through the
Bank  include advances from the Federal Home Loan Bank, purchasing federal funds
from  other  financial institutions, lines of credit through the Federal Reserve
Bank,  and  increasing  deposits  by  raising rates paid.  At December 31, 2002,
based  on  its approved line of credit equal to 20% of total assets and eligible
collateral  available, the Bank had additional available credit of approximately
$19  million from the FHLB.  Further, the Bank had short-term lines of credit to
purchase  unsecured  federal  funds  from  unrelated  correspondent  banks  with
available  balances  of  $17.5  million  at  December  31,  2002.


   The following table summarizes future contractual obligations as of December
31, 2002.

<TABLE>
<CAPTION>

                                         1 YEAR   1 TO 3   3 TO 5   OVER 5
(dollars in thousands)                  OR LESS    YEARS    YEARS    YEARS    TOTAL
--------------------------------------  --------  -------  -------  -------  --------
<S>                                     <C>       <C>      <C>      <C>      <C>
Time deposits. . . . . . . . . . . . .  $ 85,509  $10,488  $ 2,269  $    31  $ 98,297
FHLB advances and other. . . . . . . .    13,500   10,000   12,100    5,000    40,600
Operating leases . . . . . . . . . . .       280      290        6        -       576
                                        --------  -------  -------  -------  --------
   Total contractual cash obligations.  $ 99,289  $20,778  $14,375  $ 5,031  $139,473
                                        ========  =======  =======  =======  ========
</TABLE>

      Summit  Financial,  the  parent holding company, has limited liquidity
needs  required to pay operating expenses and to provide funding to its consumer
finance  subsidiary,  Freedom  Finance.  Summit Financial has approximately $3.5
million  in  available  liquidity remaining from its initial public offering and
the  retention  of  earnings.  A  total  of  $2.2  million of this liquidity was
advanced  to  the  Finance Company, in the form of an intercompany loan, to fund
its  operations as of December 31, 2002.  Summit Financial also has an available
line of credit totaling $2.5 million from an unaffiliated financial institution,
all of which was available at December 31, 2002. Additional sources of liquidity
for Summit Financial include borrowing funds from unrelated correspondent banks,
borrowing  from  individuals,  and payments for management fees and debt service
which  are made by the Company's subsidiary on a monthly basis.  Liquidity needs
of  Freedom  Finance,  primarily  for  the  funding of loan originations, paying
operating  expenses,  and  servicing  debt,  have  been  met to date through the
initial  capital  investment  of $500,000 made by Summit Financial, retention of
earnings,  borrowings  from  unrelated  private  investors,  and  line of credit
facilities  provided  by  Summit  Financial  and  Summit  National  Bank.

     The  Company's  management  believes  its liquidity sources are adequate to
meet  its  operating  needs.

OFF-BALANCE  SHEET  COMMITMENTS

     The  Company  is party to financial instruments with off-balance sheet risk
in  the normal course of business to meet the liquidity, credit enhancement, and
financing  needs  of its customers.  These financial instruments include legally
binding  commitments to extend credit and standby letters of credit and involve,
to  varying  degrees, elements of credit and interest rate risk in excess of the
amount  recognized  in  the  balance  sheet.  Credit  risk is the principal risk
associated  with these instruments. The contractual amounts of these instruments
represent  the  amount of credit risk should the instruments be fully drawn upon
and  the  customer  defaults.

     To  control  the  credit risk associated with entering into commitments and
issuing  letters of credit, the Company uses the same credit quality, collateral
policies, and monitoring controls in making commitments and letters of credit as
it  does  with  its  lending  activities.  The Company evaluates each customer's
creditworthiness on a case-by-case basis.  The amount of collateral obtained, if
deemed  necessary  by  the  Company  upon  extension  of  credit,  is  based  on
management's  credit  evaluation.

     Legally  binding  commitments  to extend credit are agreements to lend to a
customer  as  long  as there is no violation of any condition established in the
contract.  Commitments  generally  have  fixed  expiration  dates  or  other
termination  clauses  and  may  require  payment  of  a  fee.  Since many of the
commitments may expire without being drawn upon, the total commitment amounts do
not  necessarily  represent future cash requirements.  Standby letters of credit
obligate the Company to meet certain financial obligations of its customers, if,
under the contractual terms of the agreement, the customers are unable to do so.
The  financial  standby letters of credit issued by the Company are irrevocable.
Payment  is  only  guaranteed  under these letters of credit upon the borrower's
failure  to  perform  its obligations to the beneficiary.  As such, there are no
"stand-ready  obligations" in any of the letters of credit issued by the Company
and  the  contingent  obligations  are  accounted for in accordance with SFAS 5,
"Accounting  for  Contingencies".

     Approximately  $2.5  million  and  $2.8  million  of  total  commitments at
December 31, 2002 and 2001, respectively, represent commitments to extend credit
at fixed rates of interest, which exposes the Company to some degree of interest
rate  risk.

    At  December  31,  the  Company's  total contractual amounts of commitments
and letters  of  credit  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)                                      2002     2001
---------------------------------------------------------  -------  -------
<S>                                                        <C>      <C>
Legally binding commitments to extend credit:
   Commercial and industrial. . . . . . . . . . . . . . .  $18,474  $16,991
   Residential real estate, including prime equity lines.   18,499   15,575
   Construction and development . . . . . . . . . . . . .   12,971    7,424
   Consumer and overdraft protection. . . . . . . . . . .    2,927    2,453
                                                           -------  -------
                                                            52,871   42,443
Standby letters of credit . . . . . . . . . . . . . . . .    3,607    4,798
                                                           -------  -------
Total commitments . . . . . . . . . . . . . . . . . . . .  $56,478  $47,241
                                                           =======  =======
</TABLE>

ACCOUNTING,  REPORTING  AND  REGULATORY  MATTERS

     In July 2001, SFAS 141, "Business Combinations" and SFAS 142, "Goodwill and
Other  Intangible  Assets"  were  issued.  SFAS  141  requires that the purchase
method  of accounting be used for all business combinations initiated after June
30,  2001.  SFAS 141 also specifies criteria which intangible assets acquired in
a  purchase  method business combination must meet to be recognized and reported
apart from goodwill.  SFAS 142 requires that goodwill and intangible assets with
indefinite  useful  lives  no  longer  be  amortized,  but instead be tested for
impairment  at  least  annually  in  accordance with the provisions of SFAS 142.
SFAS  142  also  requires  that intangible assets with estimable useful lives be
amortized  over  their  respective  estimated  useful  lives  to their estimated
residual  values,  and  reviewed  for  impairment  in  accordance with SFAS 144,
"Accounting  for  the  Impairment  and  Disposal  of  Long-Lived  Assets".

     The  Company  was  required to adopt the provisions of SFAS 141 immediately
and has adopted SFAS 142 effective January 1, 2002.  SFAS 141 requires that upon
adoption  of  SFAS  142, the Company evaluate its existing intangible assets and
goodwill  that were acquired in any prior purchase business combination and make
any  necessary  reclassifications  in  order to conform with the new criteria in
SFAS  141  for  recognition apart from goodwill.  Upon adoption of SFAS 142, the
Company  was  required  to  reassess the useful lives and residual values of all
intangible  assets  acquired,  and  make  any  necessary  amortization  period
adjustments by the end of the first interim period after adoption.  In addition,
to  the  extent an intangible asset is identified as having an indefinite useful
life,  the  Company  was required to test the intangible asset for impairment in
accordance  with the provisions of SFAS 142 within the first interim period.  No
impairment  loss  was  determined  as  of  the  date  of  adoption.

     In  connection with SFAS 142's transitional goodwill impairment evaluation,
the  statement requires the Company to perform an assessment of whether there is
an  indication  that  goodwill  is  impaired  as  of  the  date of adoption.  To
accomplish this, the Company must identify its reporting units and determine the
carrying value and the fair value of each reporting unit by assigning the assets
and liabilities, including the existing goodwill and intangible assets, to those
reporting  units  as  of the date of adoption.  To the extent a reporting unit's
carrying  amount exceeds its fair value, an indication exists that the reporting
unit's  goodwill may be impaired and the Company must perform the second step of
the  transitional impairment test.  In the second step, the Company must compare
the  implied fair value of the reporting unit's goodwill to its carrying amount,
both of which would be measured as of the date of adoption.  This second step is
required  to  be completed as soon as possible, but no later than the end of the
year  of  adoption.  Any  transitional impairment loss will be recognized as the
cumulative effect of a change in accounting principle in the Company's statement
of  operations.  As  of  the  date  of adoption of SFAS 142, the Company's gross
carrying  amount  for goodwill associated with its previous acquisitions totaled
$183,000,  net  of  accumulated  amortization.  For the years ended December 31,
2001  and  2000,  the  amortization  of  goodwill was $157,000 each period.  The
amortization  of  goodwill  ceased  effective  January  1,  2002.

          In  August 2001, SFAS 144, "Accounting for the Impairment and Disposal
of  Long-Lived  Assets"  was issued which addresses the financial accounting and
reporting  for  the impairment or disposal of long-lived assets.  While SFAS 144
supercedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived  Assets  to  Be  Disposed  Of",  it  retains  many of the fundamental
provisions  of SFAS 121.  The provisions of SFAS 144 are effective for financial
statements  issued  for  fiscal  years  beginning  after  December 15, 2001, and
interim  periods  within  those  fiscal  years.  The Company adopted SFAS 144 on
January  1,  2002  with  no  material  effect  on  the  Company.

     In  April 2002, SFAS 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections" was issued.  This
statement  rescinds  SFAS  4, "Reporting Gains and Losses from Extinguishment of
Debt",  SFAS  64,  "Extinguishment  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements",  and  SFAS  44,  "Accounting  for  Intangible  Assets  of  Motor
Carriers".  SFAS  145  amends  SFAS 13, "Accounting for Leases", to eliminate an
inconsistency  between  the  required accounting for sale-leaseback transactions
and  the  required accounting for certain lease modifications that have economic
effects  that  are similar to sale-leaseback transactions.  SFAS 145 also amends
other  existing  authoritative  pronouncements  to  make  various  technical
corrections,  clarify  meanings,  or  describe their applicability under changed
conditions.  SFAS  145  has  no  material  effect  on  the  Company.

     In  September 2002, SFAS 146, "Accounting for Costs Associated with Exit or
Disposal  Activities,"  was  issued  which  addresses  financial  accounting and
reporting  for  costs  associated with exit or disposal activities and nullifies
Emerging  Issues  Task  Force  (EITF) Issue No. 94-3, "Liability Recognition for
Certain  Employee  Termination  Benefits  and  Other  Costs  to Exit an Activity
(including  Certain  Costs  Incurred  in a Restructuring)".  SFAS 146 applies to
costs  associated  with  an  exit activity that does not involve an entity newly
acquired  in  a business combination or with a disposal activity covered by SFAS
144,  "Accounting  for  the Impairment or Disposal of Long-Lived Assets".  Those
costs  include,  but are not limited to, the following:  a) termination benefits
provided  to current employees that are involuntarily terminated under the terms
of  a  benefit  arrangement  that,  in  substance,  is  not  an  ongoing benefit
arrangement  or  an  individual  deferred  compensation  contract;  b)  costs to
terminate  a  contract  that is not a capital lease; and c) costs to consolidate
facilities  or  relocate employees.  SFAS 146 does not apply to costs associated
with  the  retirement of a long-lived asset covered by SFAS 143, "Accounting for
Asset  Retirement  Obligations".  A liability for a cost associated with an exit
or  disposal  activity  shall  be  recognized and measured initially at its fair
value  in the period in which the liability is incurred.  A liability for a cost
associated  with an exit or disposal activity is incurred when the definition of
a  liability  is  met.  The  provisions  of  SFAS  146 are effective for exit or
disposal  activities  that  are  initiated  after  December 31, 2002, with early
application  encouraged.  The  impact of adoption on the Company is not known at
this  time.

     In  October  2002,  the  FASB  issued  SFAS  147,  "Acquisitions of Certain
Financial  Institutions, an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation  No. 9".  SFAS 147 removes acquisitions of financial institutions
from  the  scope of both SFAS 72 and FASB Interpretation No. 9 and requires that
those  transactions  be  accounted  for  in  accordance with SFAS 141, "Business
Combinations,"  and SFAS 142, "Goodwill and Other Intangible Assets," except for
transactions  between  two or more mutual enterprises.  Thus, the requirement in
SFAS 72 to recognize (and subsequently amortize) any excess of the fair value of
liabilities  assumed  over  the  fair  value of tangible and identifiable assets
acquired as an unidentifiable intangible asset no longer applies to acquisitions
within the scope of SFAS 72.  In addition, SFAS 147 amends SFAS 144, "Accounting
for  the  Impairment  or  Disposal of Long-Lived Assets" to include in its scope
long-term customer-relationship intangible assets of financial institutions such
as  depositor  and borrower relationship intangible assets and credit cardholder
intangible  assets.  Consequently,  those  intangible  assets are subject to the
same  undiscounted cash flow recoverability test and impairment loss recognition
and  measurement  provisions  that SFAS 144 requires for other long-lived assets
that  are  held  and used.  The provisions of SFAS 147 are effective on or after
October  1,  2002.  The  adoption  of  SFAS  147  had  no material effect on the
Company.

     In  December  2002,  the  FASB issued SFAS 148, "Accounting for Stock-Based
Compensation  -  Transition  and  Disclosure".  SFAS  148  amends  SFAS  123,
"Accounting  for  Stock-Based  Compensation",  to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of  accounting  for  stock-based  employee  compensation.  It  also  amends  the
disclosure  provision  of  SFAS  123  to  require prominent disclosure about the
effects  on  reported net income of an entity's accounting policy decisions with
respect  to stock-based employee compensation.  SFAS 148 also amends APB Opinion
28,  "Interim Financial Reporting", to require disclosure about those effects in
interim  financial  information.  SFAS 148 is effective for financial statements
for  fiscal  years  ending  after  December 15, 2002 and effective for financial
reports  containing condensed financial statements for interim periods beginning
after  December  15, 2002.  The Company has adopted the disclosure provisions of
SFAS  148  in  its consolidated financial statements for the year ended December
31,  2002.

     In  November  2002,  the  FASB  issued  Interpretation No. 45, "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of  Others"  ("FIN 45").  FIN 45 elaborates on the
disclosure  to  be  made  by  a  guarantor  in  its interim and annual financial
statements  about  its  obligations under certain guarantees that it has issued.
It also clarifies that a guarantor is required to recognize, at the inception of
a  guarantee,  a  liability  for  the fair value of the obligation undertaken in
issuing  the  guarantee.  FIN  45  clarifies  that  a  guarantor  is required to
disclose  (a)  the  nature of the guarantee; (b) the maximum potential amount of
future  payments  under the guarantee; (c) the carrying amount of the liability;
and (d) the nature and extent of any recourse provisions or available collateral
that would enable the guarantor to recover the amounts paid under the guarantee.
FIN 45 also clarifies that a guarantor is required to recognize, at inception of
a  guarantee,  a  liability  for the obligation it has undertaken in issuing the
guarantee  at  its  inception.


ITEM  7A.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     See  "Market  Risk  and Asset-Liability Management" in Item 7, Management's
Discussion  and  Analysis  of  Financial Condition and Results of Operations for
quantitative and qualitative disclosures about market risk, which information is
incorporated  herein  by  reference.


<PAGE>

ITEM  8.          FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

<TABLE>
<CAPTION>

                  SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)

                                                         December 31,
                                                     --------------------
                                                        2002       2001
                                                     ---------   --------
<S>                                                   <C>        <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . .  $  6,929   $  8,579
Interest-bearing bank balances . . . . . . . . . . .     2,176        945
Federal funds sold . . . . . . . . . . . . . . . . .     2,491        925
Investment securities available for sale . . . . . .    63,464     47,400
Investment in Federal Home Loan Bank and other stock     2,418      1,733
Loans, net of unearned income and net of allowance
 for loan losses of $3,369 and $2,937. . . . . . . .   215,431    204,104
Premises and equipment, net. . . . . . . . . . . . .     4,197      4,447
Accrued interest receivable. . . . . . . . . . . . .     1,418      1,393
Other assets . . . . . . . . . . . . . . . . . . . .     3,682      3,571
                                                      ---------  ---------
                                                      $302,206   $273,097
                                                      =========  =========
  LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
 Noninterest-bearing demand. . . . . . . . . . . . .  $ 33,342   $ 29,372
 Interest-bearing demand . . . . . . . . . . . . . .    24,943     21,807
 Savings and money market. . . . . . . . . . . . . .    73,933     85,388
 Time deposits, $100,000 and over. . . . . . . . . .    48,791     41,798
 Other time deposits . . . . . . . . . . . . . . . .    49,506     40,413
                                                      ---------  ---------
                                                       230,515    218,778
Federal Home Loan Bank advances. . . . . . . . . . .    40,600     26,900
Other short-term borrowings. . . . . . . . . . . . .         -        500
Accrued interest payable . . . . . . . . . . . . . .     1,006      1,194
Other liabilities. . . . . . . . . . . . . . . . . .     1,343      1,124
                                                      ---------  ---------
     Total liabilities . . . . . . . . . . . . . . .   273,464    248,496
                                                      ---------  ---------

Shareholders' equity:
 Common stock, $1.00 par value; 20,000,000 shares
  authorized; 4,013,486 and 3,793,032 shares
  issued and outstanding . . . . . . . . . . . . . .     4,013      3,793
 Additional paid-in capital. . . . . . . . . . . . .    21,322     18,409
 Retained earnings . . . . . . . . . . . . . . . . .     2,862      2,379
 Accumulated other comprehensive income, net of tax.       600        203
 Nonvested restricted stock. . . . . . . . . . . . .       (55)      (183)
                                                      ---------  ---------
     Total shareholders' equity. . . . . . . . . . .    28,742     24,601
                                                      ---------  ---------
                                                      $302,206   $273,097
                                                      =========  =========
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                        SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF INCOME
                        (Dollars in Thousands, except Per Share Data)


                                                            For the Years Ended December 31,
                                                          ----------------------------------
                                                             2002        2001        2000
                                                          ---------   ---------   ----------
<S>                                                       <C>         <C>         <C>
Interest Income:
 Loans . . . . . . . . . . . . . . . . . . . . . . . . .  $   14,914  $   17,293  $   16,882
 Taxable securities. . . . . . . . . . . . . . . . . . .       1,934       1,751       1,187
 Nontaxable securities . . . . . . . . . . . . . . . . .         725         568         515
 Federal funds sold. . . . . . . . . . . . . . . . . . .          80         318         563
 Other . . . . . . . . . . . . . . . . . . . . . . . . .         168         275         270
                                                          ----------  ----------  ----------
                                                              17,821      20,205      19,417
                                                          ----------  ----------  ----------
Interest Expense:
 Deposits. . . . . . . . . . . . . . . . . . . . . . . .       4,598       8,628       8,463
 Federal Home Loan Bank advances . . . . . . . . . . . .       1,563       1,146         878
 Federal funds purchased . . . . . . . . . . . . . . . .           5           2          16
 Other short-term borrowings . . . . . . . . . . . . . .           8          31          37
                                                          ----------  ----------  ----------
                                                               6,174       9,807       9,394
                                                          ----------  ----------  ----------
     Net interest income . . . . . . . . . . . . . . . .      11,647      10,398      10,023
Provision for loan losses. . . . . . . . . . . . . . . .         847         725         654
                                                          ----------  ----------  ----------
     Net interest income after provision for loan losses      10,800       9,673       9,369
                                                          ----------  ----------  ----------

Noninterest Income:
 Service charges and fees on deposit accounts. . . . . .         553         430         369
 Merchant and credit card fees . . . . . . . . . . . . .         450         457         376
 Insurance commission fee income . . . . . . . . . . . .         587         485         337
 Gain on sale of investment securities . . . . . . . . .         117         257          12
 Other income. . . . . . . . . . . . . . . . . . . . . .         964         953         752
                                                          ----------  ----------  ----------
                                                               2,671       2,582       1,846
                                                          ----------  ----------  ----------
Noninterest Expense:
 Salaries, wages and benefits. . . . . . . . . . . . . .       5,060       4,815       4,279
 Occupancy . . . . . . . . . . . . . . . . . . . . . . .         644         652         630
 Furniture, fixtures and equipment . . . . . . . . . . .         673         667         663
 Other expenses. . . . . . . . . . . . . . . . . . . . .       2,067       2,125       1,784
                                                          ----------  ----------  ----------
                                                               8,444       8,259       7,356
                                                          ----------  ----------  ----------
Income before income taxes . . . . . . . . . . . . . . .       5,027       3,996       3,859
Income taxes . . . . . . . . . . . . . . . . . . . . . .       1,585       1,280       1,204
                                                          ----------  ----------  ----------
Net income . . . . . . . . . . . . . . . . . . . . . . .  $    3,442  $    2,716  $    2,655
                                                          ==========  ==========  ==========

Net income per common share:
 Basic . . . . . . . . . . . . . . . . . . . . . . . . .  $     0.87  $     0.69  $     0.68
 Diluted . . . . . . . . . . . . . . . . . . . . . . . .  $     0.76  $     0.63  $     0.62
Average shares outstanding:
 Basic . . . . . . . . . . . . . . . . . . . . . . . . .   3,977,000   3,936,000   3,902,000
 Diluted . . . . . . . . . . . . . . . . . . . . . . . .   4,518,000   4,333,000   4,266,000
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                   SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                               FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
                                               (Dollars in Thousands)


                                                                                         Accumulated
                                                                                            Other
                                                              Additional                Comprehensive    Nonvested
                                                    Common     paid-in      Retained       Income       Restricted
                                                    stock      capital      earnings     (loss), net       stock
                                                   --------  ------------  ----------  ---------------  -----------
<S>                                                <C>       <C>           <C>         <C>              <C>
Balance at December 31, 1999. . . . . . . . . . .  $ 3,244   $    14,730   $     483            ($563)       ($303)
Net income for the year ended
December 31, 2000 . . . . . . . . . . . . . . . .        -             -       2,655                -            -
Other comprehensive income:
Unrealized holding gains on securities
arising during the period, net of taxes of $369 .        -             -           -              603            -
 Less: reclassification adjustment for
gains included in net income, net of tax of ($4).        -             -           -               (8)
                                                                                       ---------------
 Other comprehensive income . . . . . . . . . . .        -             -           -              595            -
                                                                                       ---------------
Comprehensive income. . . . . . . . . . . . . . .        -             -           -                -            -
Stock options exercised . . . . . . . . . . . . .      169           392           -                -            -
Issuance of common stock pursuant
to restricted stock plan. . . . . . . . . . . . .       14           141           -                -         (155)
Amortization of deferred compensation
on restricted stock . . . . . . . . . . . . . . .        -             -           -                -          128
Issuance of 5% stock dividend . . . . . . . . . .      171         1,540      (1,711)               -            -
Cash in lieu of fractional shares . . . . . . . .        -             -          (2)               -            -
                                                   --------  ------------  ----------  ---------------  -----------
Balance at December 31, 2000. . . . . . . . . . .    3,598        16,803       1,425               32         (330)
Net income for the year ended
 December 31, 2001. . . . . . . . . . . . . . . .        -             -       2,716                -            -
Other comprehensive income:
Unrealized holding gains on securities
arising during the period, net of taxes of $187 .        -             -           -              346            -
 Less: reclassification adjustment for
gains included in net income, net of tax of ($82)        -             -           -             (175)
                                                                                       ---------------
 Other comprehensive income . . . . . . . . . . .        -             -           -              171            -
                                                                                       ---------------
Comprehensive income. . . . . . . . . . . . . . .        -             -           -                -            -
Stock options exercised . . . . . . . . . . . . .       16            47           -                -            -
Cancellation of restricted common stock . . . . .       (2)          (19)          -                -           21
Amortization of deferred compensation
on restricted stock . . . . . . . . . . . . . . .        -             -           -                -          126
Issuance of 5% stock dividend . . . . . . . . . .      181         1,578      (1,759)               -            -
Cash in lieu of fractional shares . . . . . . . .        -             -          (3)               -            -
                                                   --------  ------------  ----------  ---------------  -----------
Balance at December 31, 2001. . . . . . . . . . .    3,793        18,409       2,379              203         (183)
Net income for the year ended
December 31, 2002 . . . . . . . . . . . . . . . .        -             -       3,442                -            -
Other comprehensive income:
Unrealized holding gains on securities
arising during the period, net of taxes of $287 .        -             -           -              469            -
 Less: reclassification adjustment for
gains included in net income, net of tax of ($45)        -             -           -              (72)
                                                                                       ---------------
 Other comprehensive income . . . . . . . . . . .        -             -           -              397            -
                                                                                       ---------------
Comprehensive income. . . . . . . . . . . . . . .        -             -           -                -            -
Stock options exercised . . . . . . . . . . . . .       30           148           -                -            -
Amortization of deferred compensation
on restricted stock . . . . . . . . . . . . . . .        -             -           -                -          128
Issuance of 5% stock dividend . . . . . . . . . .      190         2,765      (2,955)               -            -
Cash in lieu of fractional shares . . . . . . . .        -             -          (4)               -            -
                                                   --------  ------------  ----------  ---------------  -----------
Balance at December 31, 2002. . . . . . . . . . .  $ 4,013   $    21,322   $   2,862   $          600         ($55)
                                                   ========  ============  ==========  ===============  ===========




                                                        Total
                                                    Shareholders'
                                                       equity
                                                   ---------------
<S>                                                <C>
Balance at December 31, 1999. . . . . . . . . . .  $       17,591
Net income for the year ended
December 31, 2000 . . . . . . . . . . . . . . . .           2,655
Other comprehensive income:
Unrealized holding gains on securities
arising during the period, net of taxes of $369
 Less: reclassification adjustment for
gains included in net income, net of tax of ($4)
 Other comprehensive income . . . . . . . . . . .             595
                                                   ---------------
Comprehensive income. . . . . . . . . . . . . . .           3,250
                                                   ---------------
Stock options exercised . . . . . . . . . . . . .             561
Issuance of common stock pursuant
to restricted stock plan. . . . . . . . . . . . .               -
Amortization of deferred compensation
on restricted stock . . . . . . . . . . . . . . .             128
Issuance of 5% stock dividend . . . . . . . . . .               -
Cash in lieu of fractional shares . . . . . . . .              (2)
                                                   ---------------
Balance at December 31, 2000. . . . . . . . . . .          21,528
Net income for the year ended
 December 31, 2001. . . . . . . . . . . . . . . .           2,716
Other comprehensive income:
 Unrealized holding gains on securities
arising during the period, net of taxes of $187
 Less: reclassification adjustment for
gains included in net income, net of tax of ($82)
 Other comprehensive income . . . . . . . . . . .             171
                                                   ---------------
Comprehensive income. . . . . . . . . . . . . . .           2,887
                                                   ---------------
Stock options exercised . . . . . . . . . . . . .              63
Cancellation of restricted common stock . . . . .               -
Amortization of deferred compensation
on restricted stock . . . . . . . . . . . . . . .             126
Issuance of 5% stock dividend . . . . . . . . . .               -
Cash in lieu of fractional shares . . . . . . . .              (3)
                                                   ---------------
Balance at December 31, 2001. . . . . . . . . . .          24,601
Net income for the year ended
December 31, 2002 . . . . . . . . . . . . . . . .           3,442
Other comprehensive income:
 Unrealized holding gains on securities
arising during the period, net of taxes of $287
 Less: reclassification adjustment for
gains included in net income, net of tax of ($45)
 Other comprehensive income . . . . . . . . . . .             397
                                                   ---------------
Comprehensive income. . . . . . . . . . . . . . .           3,839
                                                   ---------------
Stock options exercised . . . . . . . . . . . . .             178
Amortization of deferred compensation
on restricted stock . . . . . . . . . . . . . . .             128
Issuance of 5% stock dividend . . . . . . . . . .               -
Cash in lieu of fractional shares . . . . . . . .              (4)
                                                   ---------------
Balance at December 31, 2002. . . . . . . . . . .  $       28,742
                                                   ===============
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                         SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (Dollars in Thousands)

                                                              For the Years Ended December 31,
                                                              --------------------------------
                                                                 2002       2001       2000
                                                              ---------  ---------  ----------
<S>                                                            <C>        <C>        <C>
Cash flows from operating activities:
  Net income. . . . . . . . . . . . . . . . . . . . . . . . .  $  3,442   $  2,716   $  2,655
  Adjustments to reconcile net income to net cash
     provided by operating activities:
    Provision for loan losses . . . . . . . . . . . . . . . .       847        725        654
    Depreciation. . . . . . . . . . . . . . . . . . . . . . .       488        467        478
    Net gain on sale and disposal of equipment and vehicles .         -        (28)         -
    Net gain on sale of investment securities . . . . . . . .      (117)      (257)       (12)
    Net amortization of net premium on investment securities.       221        175         30
    Amortization of deferred compensation on restricted stock       128        126        128
    (Increase) decrease in other assets . . . . . . . . . . .      (222)       309       (210)
    Increase (decrease) in other liabilities. . . . . . . . .        31       (298)       454
    Deferred income taxes . . . . . . . . . . . . . . . . . .      (156)      (205)      (200)
                                                               ---------  ---------  ---------
        Net cash provided by operating activities. . . . . .      4,662      3,730      3,977
                                                               ---------  ---------  ---------
Cash flows from investing activities:
  Purchases of investment securities. . . . . . . . . . . . .   (48,930)   (38,533)   (12,415)
  Proceeds from sales of investment securities. . . . . . . .    19,945     12,695      5,400
  Proceeds from maturities of investment securities . . . . .    13,456     11,241      1,977
  Purchases of Federal Home Loan Bank and other stock . . . .      (685)      (345)      (450)
  Net increase in loans . . . . . . . . . . . . . . . . . . .   (12,174)   (26,868)   (32,608)
  Purchases of premises and equipment . . . . . . . . . . . .      (238)    (1,470)    (1,061)
  Proceeds from sale of equipment and vehicles. . . . . . . .         -         57          -
                                                               ---------  ---------  ---------
         Net cash used by investing activities. . . . . . . .   (28,626)   (43,223)   (39,157)
                                                               ---------  ---------  ---------
Cash flows from financing activities:
  Net increase in deposit accounts. . . . . . . . . . . . . .    11,737      9,587     51,195
  Net (decrease) increase in federal funds
   purchased and repurchase agreements . . . . .. . . . . . .         -          -     (4,000)
  Proceeds from Federal Home Loan Bank advances . . . . . . .    25,500     17,000     22,000
  Repayments of Federal Home Loan Bank advances . . . . . . .   (11,800)    (6,100)   (15,000)
  Repayments of other short-term borrowings . . . . . . . . .      (500)         -          -
  Proceeds from stock options exercised . . . . . . . . . . .       178         63        561
  Cash paid in lieu of fractional shares. . . . . . . . . . .        (4)        (3)        (2)
                                                               ---------  ---------  ---------
         Net cash provided by financing activities. . . . . .    25,111     20,547     54,754
                                                               ---------  ---------  ---------
Net (decrease) increase in cash and cash equivalents. . . . .     1,147    (18,946)    19,574
Cash and cash equivalents, beginning of year. . . . . . . . .    10,449     29,395      9,821
                                                               ---------  ---------  ---------
Cash and cash equivalents, end of year. . . . . . . . . . . .  $ 11,596   $ 10,449   $ 29,395
                                                               =========  =========  =========
Supplemental Information:
  Cash paid during the period for interest. . . . . . . . . .  $  6,362   $ 10,366   $  8,773
  Cash paid during the year for income taxes. . . . . . . . .     1,610      1,445      1,419
  Change in fair market value of investments securities
    available for sale, net of income taxes . . . . . . . . .       397        171        595
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>

<PAGE>


                  SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

PRINCIPLES  OF CONSOLIDATION  -  Summit Financial Corporation (the "Company"), a
South  Carolina  corporation,  is the parent holding company for Summit National
Bank  (the  "Bank"), a nationally chartered bank, and Freedom Finance, Inc. (the
"Finance  Company"),  a  consumer  finance company.  Summit Investment Services,
Inc.  is  a  wholly-owned  subsidiary  of  the  Bank  which  provides  financial
management services and nondeposit product sales.  The accompanying consolidated
financial  statements  include the accounts of the Company and its subsidiaries.
All  significant  intercompany accounts and transactions have been eliminated in
consolidation.

USE  OF  ESTIMATES  -  The  consolidated  financial  statements  are prepared in
conformity with accounting principles generally accepted in the United States of
America  ("GAAP")  which  requires management to make estimates and assumptions.
These  estimates  and  assumptions  affect  the  reported  amounts of assets and
liabilities  and the disclosure of contingent assets and liabilities at the date
of  the  financial statements.  In addition, they affect the reported amounts of
income  and  expense  during  the reporting period.  Actual results could differ
from  these  estimates  and  assumptions.

CASH  AND  CASH  EQUIVALENTS  -  For  the  purpose of reporting cash flows, cash
includes  currency  and  coin,  cash items in process of collection and due from
banks.  Included  in  cash  and  cash  equivalents  are  federal  funds sold and
overnight  investments.  The  Company  considers  the  amounts  included  in the
balance  sheet  line  items,  "Cash  and due from banks", "Interest-bearing bank
balances"  and  "Federal  funds  sold"  to  be cash and cash equivalents.  These
accounts  totaled  $11,596,000  and  $10,449,000  at December 31, 2002 and 2001,
respectively

INVESTMENT  SECURITIES  -  Investment securities are accounted for in accordance
with  Statement  of Financial Accounting Standards ("SFAS") 115, "Accounting for
Certain  Investments  in  Debt and Equity Securities".  At the time of purchase,
investment  securities  are  classified  by  management into three categories as
follows:  (1) Investments Held to Maturity: securities which the Company has the
positive intent and ability to hold to maturity, which are reported at amortized
cost;  (2)  Trading  Securities: securities that are bought and held principally
for  the  purpose of selling them in the near future, which are reported at fair
value with unrealized gains and losses included in earnings; and (3) Investments
Available  for Sale: securities that may be sold under certain conditions, which
are  reported  at  fair  value,  with  unrealized gains and losses excluded from
earnings  and  reported  as a separate component of shareholders' equity, net of
income  taxes.  The  amortization  of  premiums  and  accretion  of discounts on
investment  securities are recorded as adjustments to interest income.  Gains or
losses  on  sales of investment securities are based on the net proceeds and the
adjusted  carrying  amount  of  the  securities  sold,  using  the  specific
identification method.  Unrealized losses on securities, reflecting a decline in
value  or  impairment  judged  by  the  Company  to be other than temporary, are
charged  to  income  in  the  consolidated  statements  of  income.

LOANS  -  Loans of the Bank are carried at principal amount outstanding, reduced
by  an  allowance  for  loan  losses.  The Bank recognizes interest income daily
based on the principal amount outstanding using the simple interest method.  The
accrual  of interest is generally discontinued on loans of the Bank which become
90  days past due as to principal or interest or when management believes, after
considering  economic  and  business conditions and collection efforts, that the
borrower's  financial condition is such that collection of interest is doubtful.
Management  may  elect  to  continue  accrual of interest when the estimated net
realizable value of collateral is sufficient to cover the principal balances and
accrued interest and the loan is in the process of collection.  Amounts received
on  nonaccrual  loans  generally  are  applied  against  principal  prior to the
recognition  of  any  interest income.  Generally, loans are restored to accrual
status  when the obligation is brought current, has performed in accordance with
the  contractual  terms  for  a  reasonable  period  of  time  and  the ultimate
collectibility  of  the total contractual principal and interest is no longer in
doubt.

     Loans  of  the Finance Company are carried at the gross amount outstanding,
reduced  by  unearned interest, insurance income and other deferred fees, and an
allowance  for loan losses.  Unearned interest and fees are deferred at the time
the  loans are made and accreted to income using the "Rule of 78's" method.  The
results of this method are not materially different from those obtained by using
the  simple  interest  method.  Charges for late payments are credited to income
when  collected.  Loans  of  the  Finance Company are generally charged-off when
they  become  150  days  past  due  or  when it is determined that collection is
doubtful.

LOAN  ORIGINATION  AND  COMMITMENT  FEES  -  The  Company  accounts  for  loan
origination  fees  and direct costs of loan originations in accordance with SFAS
91,  "Accounting for Nonrefundable Fees and Costs Associated with Originating or
Acquiring  Loans  and  Direct  Costs  of  Leases".  SFAS 91 generally limits the
definition  of  loan  origination  costs  to  the  direct  costs attributable to
originating  a  loan, which are principally actual personnel costs.  Pursuant to
SFAS  91,  loan  commitment  fees,  net of certain direct origination costs, are
deferred  and  recognized  as an adjustment of yield by the interest method over
the related loan's life, or if the commitment expires unexercised, recognized in
income  upon  expiration.

ALLOWANCE  FOR LOAN LOSSES  -  It is the Company's policy to provide a valuation
allowance  for estimated losses on loans based upon past loss experience, trends
in  the  level of delinquent and specific problem loans, adverse situations that
may  affect  the  borrower's  ability  to  repay,  the  estimated  value  of any
underlying  collateral,  and  current  economic conditions in the Bank's primary
market  areas.  The allowance for loan losses is established through a provision
for  loan  losses  charged  to  operations  and  reflects  an  amount  that,  in
management's  opinion,  is  adequate  to  absorb inherent losses in the existing
portfolio.  Additions  to  the allowance are based on management's evaluation of
the  loan  portfolio  and specific loans, in addition to other factors which, in
management's judgment, deserve recognition in estimating loan losses.  Loans are
charged-off  when,  in  the  opinion  of  management,  they  are  deemed  to  be
uncollectible.  Recognized  losses  are  charged  against  the  allowance  and
subsequent  recoveries are added to the allowance.  Management believes that the
allowance  is adequate to absorb probable losses inherent in the loan portfolio.
While  management  uses  the  information  available to make evaluations, future
adjustments to the allowance may be necessary if economic conditions differ from
the  assumptions  used in making the evaluations.  The allowance for loan losses
is  subject  to periodic evaluation by various regulatory authorities and may be
subject  to  adjustments based upon information that is available to them at the
time  of  their  examination.

     The  Company  accounts  for  impaired  loans  in  accordance with SFAS 114,
"Accounting  by Creditors for Impairment of a Loan".  Loans are considered to be
impaired  when,  in  management's  judgment,  the  collection  of all amounts of
principal  and interest is not probable in accordance with the terms of the loan
agreement.  SFAS  114  requires  that  impaired loans be recorded at fair value,
which  is  determined  based  upon  the  present  value  of  expected cash flows
discounted  at the loan's effective interest rate, the market price of the loan,
if  available,  or the value of the underlying collateral.  All cash receipts on
impaired  loans  are  applied  to  principal until such time as the principal is
brought  current,  and  thereafter  according  to  the  contractual terms of the
agreement.  After principal has been satisfied, future cash receipts are applied
to  interest  income,  to  the extent that any interest has been foregone.  As a
practical  matter,  the  Bank determines which loans are impaired through a loan
review  process.

OFF-BALANCE  SHEET  COMMITMENTS  -  In the ordinary course of business, the Bank
has  entered  into off-balance sheet financial instruments consisting of legally
binding  commitments  to  extend  credit  and letters of credit.  Such financial
instruments  are  recorded  in  the  financial  statements when they are funded.

PREMISES  AND  EQUIPMENT  -  Premises,  equipment and leasehold improvements are
stated  at cost less accumulated depreciation and amortization.  Depreciation is
recorded  using  the  straight-line method over the estimated useful life of the
related  assets as follows: building, 40 years; furniture and fixtures, 7 years;
equipment  and  computer  hardware  and  software, 3 to 7 years; and vehicles, 3
years.  Amortization  of  leasehold  improvements  is  recorded  using  the
straight-line  method  over the lesser of the estimated useful life of the asset
or  the  term  of the respective lease.  Additions to premises and equipment and
major  replacements  or betterments are added at cost.  Maintenance, repairs and
minor  replacements  are  charged to operating expense as incurred.  When assets
are  retired or otherwise disposed of, the cost and accumulated depreciation are
removed  from  the  accounts  and  any  gain  or  loss  is  reflected in income.

PER  SHARE  DATA  -  Earnings  per share ("EPS") are computed in accordance with
SFAS 128, "Earnings per Share."  SFAS 128 requires companies to report basic and
diluted  EPS.  Basic EPS includes no dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding  for  the  period.  Shares of restricted stock that are unvested are
not  included  in weighted average shares outstanding.  Diluted EPS reflects the
potential  dilution  of  securities  that  could occur if the Company's dilutive
stock  options were exercised and thus resulted in the issuance of common stock.
Also  included  in  diluted  weighted  average  shares  outstanding  is unvested
restricted  stock.  The Company has issued eleven consecutive 5% stock dividends
between  1993  and  2002.  The  basic  and  diluted  average  number  of  shares
outstanding  and  earnings per share information for all prior reporting periods
have  been  restated  to  reflect  the  effect  of  all  stock  dividends.

INTANGIBLE  ASSETS  -  As  of  January  1,  2002,  the Company adopted SFAS 142,
"Goodwill  and  Other  Intangible  Assets".  SFAS 142 requires that goodwill and
intangible  assets  with  indefinite  useful  lives  no longer be amortized, but
instead  be  tested  for  impairment  at  least  annually in accordance with the
provisions  of  SFAS  142.  The  Company's intangible assets consist of goodwill
resulting  from  the  Finance  Company's branch acquisitions and are included in
"Other  assets"  on  the accompanying consolidated balance sheets.  Prior to the
adoption  of SFAS 142, the Company recorded amortization of goodwill of $157,000
for  each  of the years ended December 31, 2001 and 2000 using the straight-line
method  over  a seven-year period.  The balance of goodwill at December 31, 2002
and  2001  was  $187,000  and $183,000, respectively.  Information regarding the
effect of amortization expense and net income of the Company for the years ended
December  31  is  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands, except per share data)   2002    2001    2000
---------------------------------------------  ------  ------  ------
<S>                                            <C>     <C>     <C>

Net income as reported. . . . . . . . . . . .  $3,442  $2,716  $2,655
Goodwill amortization, net of taxes . . . . .       -     107     107
                                               ------  ------  ------
Adjusted net income . . . . . . . . . . . . .  $3,442  $2,823  $2,762
                                               ======  ======  ======

Basic earnings per share, as reported . . . .  $ 0.87  $ 0.69  $ 0.68
Goodwill amortization, net of taxes . . . . .       -    0.03    0.03
                                               ------  ------  ------
Adjusted basic earnings per share . . . . . .  $ 0.87  $ 0.72  $ 0.71
                                               ======  ======  ======

Diluted earnings per share, as reported . . .  $ 0.76  $ 0.63  $ 0.62
Goodwill amortization, net of taxes . . . . .       -    0.02    0.03
                                               ------  ------  ------
Adjusted diluted earnings per share . . . . .  $ 0.76  $ 0.65  $ 0.65
                                               ======  ======  ======
</TABLE>

INCOME  TAXES  -  Income  taxes  are  accounted for in accordance with SFAS 109,
"Accounting  for  Income  Taxes".  Under  the asset and liability method of SFAS
109,  deferred  tax  assets  and  liabilities  are recognized for the future tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using the enacted rates
expected  to  apply  to  taxable  income  in  the years in which those temporary
differences are expected to be recovered or settled.  Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.  Valuation allowances are
established to reduce deferred tax assets if it is determined to be "more likely
than  not" that all or some portion of the potential deferred tax asset will not
be  realized.

REPORTING  COMPREHENSIVE  INCOME  -  The Company reports comprehensive income in
accordance  with  SFAS 130, "Reporting Comprehensive Income."  SFAS 130 requires
that  all items that are required to be recognized under accounting standards as
comprehensive income be reported in a financial statement that is displayed with
the  same prominence as other financial statements.  The disclosure requirements
of  SFAS  130  have  been  included  in the Company's consolidated statements of
shareholders'  equity  and  comprehensive  income.

DISCLOSURES  REGARDING  SEGMENTS  -  SFAS 131, "Disclosures about Segments of an
Enterprise  and  Related  Information"  establishes  standards  for the way that
public  businesses  report  information  about  operating  segments  in  annual
financial  statements  and  requires  that  those  enterprises  report  selected
information  about  operating  segments  in  interim financial reports issued to
shareholders.  It  also  establishes  standards  for  related  disclosures about
products  and  services, geographic areas, and major customers.  The Company has
two  reportable  operating  segments,  Summit National Bank and Freedom Finance,
Inc.

FAIR  VALUE OF FINANCIAL INSTRUMENTS  -  SFAS 107, "Disclosures about Fair Value
of  Financial  Instruments",  requires  disclosures  about the fair value of all
financial  instruments,  whether or not recognized in the balance sheet, when it
is  practicable to estimate fair value.  In cases where quoted market prices are
not  available,  fair values are based on estimates using present value or other
valuation  techniques.  Those  techniques  are  significantly  affected  by  the
assumptions  used,  including  the  discount  rate  and estimates of future cash
flows.  In that regard, the derived fair value estimates cannot be substantiated
by  comparison  to independent markets and, in many cases, could not be realized
through  immediate  settlement  of the instrument.  SFAS 107 defines a financial
instrument  as  cash,  evidence  of  an  ownership  interest  in  an  entity, or
contractual  obligations  which  require the exchange of cash or other financial
instruments.  Certain  financial  instruments  and all non-financial instruments
are  specifically  excluded  from  the  disclosure  requirements,  including the
Company's  common  stock,  premises  and  equipment,  and  other  assets  and
liabilities.  Accordingly,  the  aggregate  fair  value amounts presented do not
represent  the  underlying  value  of  the  Company.

STOCK-BASED  COMPENSATION  -  The Company reports stock-based compensation using
the  intrinsic  value  method  prescribed in Accounting Principles Board ("APB")
Opinion  25,  "Accounting  for  Stock  Issued  to  Employees",  which  measures
compensation  expense  as  the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire  the  stock.  SFAS  123,  "Accounting  for  Stock-Based  Compensation",
encourages  but  does  not  require  companies  to  record compensation cost for
stock-based  compensation  plans  at  fair  value.  The  Company  follows  the
disclosure-only  provisions  of SFAS 123.  Accordingly, no compensation cost has
been  recognized  for  the stock-based option plans as all options granted under
the  plans  had  an  exercise  price equal to the market value of the underlying
common  stock  on  the date of grant.  The effect on net income and earnings per
share  if  the Company had applied the fair value recognition provisions of SFAS
123  to  stock-based  compensation  is  as  follows:

<TABLE>
<CAPTION>

(dollars, except per share, in thousands)   2002    2001    2000
-----------------------------------------  ------  ------  ------
<S>                                        <C>     <C>     <C>

Net income, as reported . . . . . . . . .  $3,442  $2,716  $2,655
Less - total stock-based employee
compensation expense determined under
fair value based method, net of taxes. .      216     345     257
                                           ------  ------  ------
Proforma net income . . . . . . . . . . .  $3,226  $2,371  $2,398
                                           ======  ======  ======
Earnings per share:
   Basic - as reported. . . . . . . . . .  $ 0.87  $ 0.69  $ 0.68
   Basic - proforma . . . . . . . . . . .  $ 0.81  $ 0.60  $ 0.61
   Diluted - as reported. . . . . . . . .  $ 0.76  $ 0.63  $ 0.62
   Diluted - proforma . . . . . . . . . .  $ 0.71  $ 0.55  $ 0.56
</TABLE>

RECLASSIFICATIONS  -  Certain  amounts  in  the  2001  and  2000  consolidated
financial  statements  have  been  reclassified  to  conform  with  the  2002
presentations.  These reclassifications had no impact on shareholders' equity or
net  income  as  previously  reported.

NOTE  2  -  RESTRICTIONS  ON  CASH  AND  DUE  FROM  BANKS
     The  Company's  bank  subsidiary  is  required  to maintain average reserve
balances,  net  of vault cash, with the Federal Reserve Bank of Richmond against
outstanding  domestic  deposits  and  certain  other  liabilities.  The required
reserves,  which  are  reported in "Cash and due from banks" on the accompanying
consolidated balance sheets, were $1,877,000 and $1,259,000 at December 31, 2002
and  2001,  respectively.

NOTE  3  -  INVESTMENT  SECURITIES
     All  investment  securities  are classified as "Available for Sale" in each
year  presented.  There  are  no  securities classified as "Held to Maturity" or
"Trading"  in  any year presented.  The aggregate amortized cost, estimated fair
value,  and gross unrealized gains and losses of investment securities available
for  sale  at  December  31  are  as  follows:

<TABLE>
<CAPTION>


(dollars in thousands)                       2002                                 2001
----------------------        -----------------------------------  ---------------------------------
                                            GROSS                              GROSS
                                          UNREALIZED    ESTIMATED            UNREALIZED    ESTIMATED
                              AMORTIZED ----------------   FAIR   AMORTIZED --------------    FAIR
                                 COST    GAINS   LOSSES    VALUE    COST    GAINS   LOSSES    VALUE
                                -------  ------  -------  -------  -------  ------  -------  -------
<S>                             <C>      <C>     <C>      <C>      <C>      <C>     <C>      <C>
U.S. government agencies . . .  $18,609  $  246    ($33)  $18,822  $11,103  $  164    ($53)  $11,214
Mortgage-backed securities . .   27,321     422       -    27,743   21,716     110    (166)   21,660
State and municipal securities   16,567     370     (38)   16,899   14,253     336     (63)   14,526
                                -------  ------  -------  -------  -------  ------  -------  -------
                                $62,497  $1,038    ($71)  $63,464  $47,072  $  610   ($282)  $47,400
                                =======  ======  =======  =======  =======  ======  =======  =======
</TABLE>

     The  amortized  cost  and  estimated  fair  value  of investment securities
available  for  sale  at  December 31, by contractual maturity, are shown in the
following  table.  Expected  maturities  may  differ from contractual maturities
because issuers may have the right to call or prepay obligations with or without
prepayment  penalties.  Estimated  fair value of securities was determined using
quoted  market  prices.

<TABLE>
<CAPTION>

                                                  2002                     2001
                                         -----------------------  ----------------------
                                                      ESTIMATED               ESTIMATED
                                          AMORTIZED      FAIR     AMORTIZED      FAIR
(dollars in thousands)                       COST       VALUE        COST       VALUE
----------------------------------------  ----------  ----------  ----------  ----------
<S>                                       <C>         <C>         <C>         <C>
Due in one year or less. . . . . . . . .  $        -  $        -  $        -  $        -
Due after one year, through five years .       9,780       9,951       6,852       6,986
Due after five years, through ten years.      16,233      16,400       8,238       8,230
Due after ten years. . . . . . . . . . .      36,484      37,113      31,982      32,184
                                          ----------  ----------  ----------  ----------
                                          $   62,497  $   63,464  $   47,072  $   47,400
                                          ==========  ==========  ==========  ==========
</TABLE>

     The change in the net unrealized gain on securities available for sale, net
of  taxes, recorded in shareholders' equity for the year ended December 31, 2002
was  $397,000.  Investment  securities  with  an  approximate  book  value  of
$23,917,000  and  $20,667,000  at December 31, 2002 and 2001, respectively, were
pledged  to  secure  public  deposits  and  for  other  purposes  as required or
permitted  by law.  Estimated fair values of securities pledged were $24,481,000
and  $20,986,000  at  December  31,  2002  and  2001,  respectively.

     Information  related  to the sale of securities classified as available for
sale  for  each  year  is  as  follows:
<TABLE>
<CAPTION>

(dollars in thousands)                      2002     2001     2000
----------------------------------------   -------  -------  ------
<S>                                        <C>      <C>      <C>
Proceeds from sales of securities . . . .  $19,945  $12,695  $5,400
Gross realized gains on securities sold .      159      261      49
Gross realized losses on securities sold.       42        4      37
</TABLE>


NOTE  4  -  INVESTMENTS  IN  STOCK
     Summit  National  Bank, as a member of the Federal Reserve Bank ("FRB") and
the Federal Home Loan Bank of Atlanta ("FHLB"), is required to own capital stock
in  these  organizations.  The  amount  of  stock  owned  is based on the Bank's
capital  levels in the case of the FRB and totaled $255,000 at December 31, 2002
and  2001.  The  amount  of  FHLB  stock owned is determined based on the Bank's
balances  of  residential  mortgages  and  advances  from  the  FHLB and totaled
$2,030,000  and  $1,345,000  at  December  31,  2002 and 2001, respectively.  At
December  31, 2002 and 2001, the Bank owns $133,000 of stock in The Bankers Bank
located  in  Atlanta, Georgia.  No ready market exists for these stocks and they
have  no  quoted  market  value.  However,  redemption  of  these  stocks  has
historically been at par value.  Accordingly, the carrying amounts are deemed to
be  a  reasonable  estimate  of  fair  value.

NOTE  5  -  LOANS  AND  ALLOWANCE  FOR  LOAN  LOSSES
     A  summary  of  loans  by  classification  at  December  31  is as follows:

<TABLE>
<CAPTION>

(dollars in thousands)                       2002       2001
-----------------------------------------  ---------  ---------
<S>                                        <C>        <C>

Commercial and industrial . . . . . . . .  $ 30,643   $ 35,737
Commercial secured by real estate . . . .    77,748     70,036
Real estate - residential mortgages . . .    67,963     64,239
Real estate - construction. . . . . . . .    32,791     26,672
Installment and other consumer loans. . .     5,846      6,301
Consumer finance, net of unearned income
 of $1,088 and $1,118 . . . . . . . . . .     3,544      3,606
Other loans and overdrafts. . . . . . . .       265        450
                                           ---------  ---------
                                            218,800    207,041
Less - allowance for loan losses. . . . .    (3,369)    (2,937)
                                           ---------  ---------
                                           $215,431   $204,104
                                           =========  =========
</TABLE>

     The  Company's loan portfolio is composed of loans to individuals and small
and  medium-sized  businesses  for  various  personal  and  commercial  purposes
primarily  in  the Upstate of South Carolina.  The loan portfolio is diversified
by  borrower  and  geographic  area.  The  Company regularly monitors its credit
concentrations  based  on  loan  purpose, industry, and customer base.  Industry
concentrations  parallel  the mix of economic activity in the Company's markets,
the  most  significant  of  which  are  the commercial real estate, textile, and
automobile  and  trucking  industries.  Although  the  portfolio  is affected by
economic  conditions, repayment of loans therein is not excessively dependent on
any  specific economic segment.  As of December 31, 2002, there were no material
concentrations  of credit risk within the Company's loan portfolio as determined
by  management.

     Changes  in  the  allowance for loan losses for the years ended December 31
are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)                            2002     2001     2000
----------------------------------------------   -------  -------  -------
<S>                                              <C>      <C>      <C>
Balance, beginning of year. . . . . . . . . . .  $2,937   $2,560   $2,163
    Provision for losses. . . . . . . . . . . .     847      725      654
    Loans charged-off . . . . . . . . . . . . .    (647)    (488)    (434)
    Recoveries of loans previously charged-off.     232      140      177
                                                 ------  -------  -------
Balance, end of year. . . . . . . . . . . . . .  $3,369   $2,937   $2,560
                                                 ======  =======   ======
</TABLE>

     Nonperforming  and  impaired  loans  at  December  31  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)                                  2002    2001    2000
----------------------------------------------------- -------  ------- -------
<S>                                                     <C>    <C>     <C>
Accruing loans, past due in excess of 90 days. . . . .  $ 187  $  153  $  122
Accruing loans, considered impaired under SFAS 114 . .      -       -   1,244
Non-accrual loans, not considered impaired . . . . . .    293     135       -
Non-accrual loans, considered impaired under SFAS 114.      -   1,045     218
</TABLE>

     There  were  no loans considered impaired during 2002.  The average balance
of impaired loans was $1,099,000 and $1,457,000 for the years ended December 31,
2001  and  2000,  respectively.  There was no allowance required on any impaired
loans  at  either  year  end.  The amount of foregone interest income that would
have  been  recorded  had  the  non-accrual  loans  performed according to their
contractual  terms  amounted to approximately $10,000, $62,000 and $6,000 during
2002,  2001  and  2000, respectively.  Interest income recognized on non-accrual
and  impaired loans was approximately $15,000, $35,000 and $158,000 during 2002,
2001  and  2000,  respectively.  There  were  no  foreclosed loans or other real
estate  owned  in  any  year  presented.

NOTE  6  -  PREMISES  AND  EQUIPMENT
     A  summary  of  premises  and  equipment  at  December  31  is  as follows:

<TABLE>
<CAPTION>

(dollars in thousands)                  2002      2001
------------------------------------  --------  --------
<S>                                   <C>       <C>

Land . . . . . . . . . . . . . . . .  $ 1,043   $ 1,043
Building and leasehold improvements.    3,333     3,333
Furniture, fixtures and equipment. .    2,950     2,718
Vehicles . . . . . . . . . . . . . .      188       191
                                      --------  --------
                                        7,514     7,285
Less - accumulated depreciation. . .   (3,317)   (2,838)
                                      --------  --------
                                      $ 4,197   $ 4,447
                                      ========  ========
</TABLE>

     Depreciation  expense charged to operations totaled $488,000, $467,000, and
$478,000  in  2002,  2001,  and  2000,  respectively.

NOTE  7  -  DEPOSITS
The  scheduled  maturities  of time deposits subsequent to December 31 each year
end  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)   2002     2001
----------------------  -------  -------
<S>                     <C>      <C>
2002 . . . . . . . . .  $     -  $72,057
2003 . . . . . . . . .   85,509    4,403
2004 . . . . . . . . .    8,271    2,479
2005 . . . . . . . . .    2,217    1,254
2006 . . . . . . . . .    1,690    1,916
2007 . . . . . . . . .      579        -
Thereafter . . . . . .       31      102
                        -------  -------
                        $98,297  $82,211
                        =======  =======
</TABLE>

     The  remaining  maturity  of  time  deposits  in denominations in excess of
$100,000  is  $23,572,000  in  three  months  or  less; $6,183,000 in over three
through six months; $13,773,000 in over six through 12 months; and $5,263,000 in
over  12  months.

NOTE  8  -  FEDERAL  HOME  LOAN  BANK  ADVANCES
     Federal Home Loan Bank ("FHLB") advances represent borrowings from the FHLB
of  Atlanta by the Bank pursuant to a line of credit collateralized by a blanket
lien on qualifying loans secured by first mortgages on 1-4 family residences and
commercial  real  estate.  These advances have various maturity dates, terms and
repayment schedules with fixed or variable rates of interest, payable monthly on
maturities  of  one  year  or  less and payable quarterly on maturities over one
year.

     Total  qualifying  loans  of  the  Bank pledged to the FHLB for advances at
December  31,  2002  were  approximately  $63 million.  The Bank has adopted the
policy of pledging excess collateral to facilitate future advances.  At December
31, 2002, the Bank had a total credit facility with the FHLB equal to 20% of the
Bank's  total  assets  with  approximately  $19  million  available at year end.
Advances  from  the FHLB, including scheduled maturities subsequent to year end,
at  December  31  consist  of  the  following:

<TABLE>
<CAPTION>

(dollars in thousands)        2002                2001
----------------------  ------------------  ------------------
MATURING IN YEAR ENDED           WEIGHTED            WEIGHTED
DECEMBER 31,            AMOUNT     RATE     AMOUNT     RATE
----------------------  -------  ---------  -------  ---------
<S>                     <C>      <C>        <C>      <C>
2002 . . . . . . . . .  $     -         -   $ 5,000      5.03%
2003 . . . . . . . . .   13,500      4.38%    8,000      6.07%
2004 . . . . . . . . .    9,000      3.34%    4,000      5.17%
2005 . . . . . . . . .    1,000      6.60%    1,000      6.60%
2006 . . . . . . . . .    5,300      4.69%    5,900      4.73%
2007 . . . . . . . . .    6,800      3.67%        -         -
Thereafter . . . . . .    5,000      4.12%    3,000      5.04%
                      ---------    -------  -------    -------
                        $40,600      4.10%  $26,900      5.35%
                      =========    =======  =======    =======
</TABLE>

     At  December  31, 2002 fixed rate FHLB advances had initial maturities from
one  to  ten years.  At December 31, 2002, included in the one, four and greater
than  five  year  maturities  were advances totaling $13 million subject to call
provisions  at  the option of the FHLB with call dates ranging from January 2003
to  September 2006.  Call provisions are more likely to be exercised by the FHLB
when  rates  rise.  Advances  totaling  $7,000,000  at December 31, 2002 were at
variable  rates  based  on three month LIBOR and were priced at 1.47% as of year
end.

NOTE  9  -  OTHER  SHORT-TERM  BORROWINGS
     Federal funds purchased represent unsecured overnight borrowings from other
financial  institutions  by  the  Bank.  These  borrowings  bear interest at the
prevailing  market  rate for federal funds purchased.  Average interest rates on
federal  funds  purchased  were  1.95%,  3.72%,  and  6.04%  for the years ended
December  31,  2002,  2001,  and  2000, respectively.  There were no outstanding
balances  of  federal  funds  purchased  at  December 31, 2002 or 2001.  Average
balances  were  $236,000,  $58,000,  and  $254,000  for  2002,  2001,  and 2000,
respectively.  The maximum balance of federal funds purchased at any time during
2002,  2001,  and  2000  was  $5.5  million,  $5.6  million,  and  $5.5 million,
respectively.  At  December 31, 2002, the Bank had short-term lines of credit to
purchase  unsecured  federal  funds from unrelated banks with available balances
totaling  $17.5  million.  These lines are generally available to be outstanding
up  to  ten consecutive days for general corporate purposes of the Bank and have
specified  repayment  deadlines after disbursement of funds.  All of the lenders
have  reserved  the  right  to  withdraw  these  lines  at  their  option.

     Other  short-term  borrowings at December 31, 2001 consisted of a term loan
agreement  with  an  unrelated  individual. This loan had an initial term of six
months  and matured during 2002.  This term loan was unsecured and paid interest
at  a  fixed  rate.  The weighted average interest rate on short-term borrowings
outstanding  for  each  of  the years ended December 31, 2002, 2001 and 2000 was
3.88%,  6.22%,  and  7.41%,  respectively.

NOTE  10  -  INCOME  TAXES
     The  provision  for  income  taxes  for  the  years ended December 31 is as
follows:

<TABLE>
<CAPTION>

(dollars in thousands)   2002     2001     2000
----------------------  -------  -------  -------
<S>                     <C>      <C>      <C>
Current:
  Federal. . . . . . .  $1,584   $1,356   $1,287
  State. . . . . . . .     157      129      117
                        -------  -------  -------
                         1,741    1,485    1,404
                        -------  -------  -------
Deferred:
  Federal. . . . . . .    (160)    (200)    (172)
  State. . . . . . . .       4       (5)     (28)
                        -------  -------  -------
                          (156)    (205)    (200)
                        -------  -------  -------
Total tax provision. .  $1,585   $1,280   $1,204
                        =======  =======  =======
</TABLE>

     Income  taxes  are  different  than  tax  expense  computed by applying the
statutory  federal  tax  rate of 34% to income before income taxes.  The reasons
for  the  differences  for  years  ended  December  31  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)               2002     2001     2000
---------------------------------  -------  -------  -------
<S>                                 <C>      <C>      <C>
Tax expense at statutory rate. . .  $1,709   $1,359   $1,312
State tax, net of federal benefit.     106       82       59
Change in valuation allowance for
 deferred tax assets . . . . . . .       -        -       (2)
Effect of tax exempt interest. . .    (227)    (168)    (148)
Other, net . . . . . . . . . . . .      (3)       7      (17)
                                    -------  -------  -------
Total. . . . . . . . . . . . . . .  $1,585   $1,280   $1,204
                                    =======  =======  =======
</TABLE>

     The  sources  and  tax  effects  of temporary differences that give rise to
significant  portions of the deferred tax assets and deferred tax liabilities at
December  31  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)                                     2002     2001
--------------------------------------------------------  ------  -------
<S>                                                       <C>      <C>
Deferred tax assets:
  Allowance for loan losses deferred for tax purposes. .  $1,117   $  971
  Book depreciation and amortization in excess of tax. .      86      134
  Other. . . . . . . . . . . . . . . . . . . . . . . . .     100       75
                                                          -------  -------
          Gross deferred tax assets. . . . . . . . . . .   1,303    1,180
                                                          -------  -------
Deferred tax liabilities:
  Unrealized net gains on securities available for sale.    (367)    (125)
  Compensation expense deferred for financial reporting.     (18)     (51)
                                                          -------  -------
          Gross deferred tax liabilities . . . . . . . .    (385)    (176)
                                                          -------  -------
Net deferred tax asset . . . . . . . . . . . . . . . . .  $  918   $1,004
                                                          =======  =======
</TABLE>

     The  net  deferred  tax  asset  is  included  in  "Other  assets"  in  the
accompanying  consolidated  balance  sheets.  A portion of the change in the net
deferred  tax  asset  relates  to  unrealized  gains  and  losses  on securities
available  for  sale for which a current period deferred tax expense of $242,000
has  been  recorded directly to shareholders' equity.  The balance of the change
in  the  net  deferred  tax  asset  results from the current period deferred tax
benefit  of  $156,000.  In management's opinion, it is more likely than not that
the  results of future operations will generate sufficient income to realize the
net  deferred  tax  asset  and no valuation allowance is considered necessary at
December  31,  2002.

NOTE  11  -  OTHER  INCOME  AND  OTHER  EXPENSES
     The  components  of other operating income and other operating expenses for
the  years  ended  December  31  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)                      2002    2001    2000
-----------------------------------------  ------  ------  ------
<S>                                        <C>     <C>     <C>

OTHER INCOME:
Late charges and other loan fees. . . . .  $  274  $  295  $  216
Mortgage origination fees . . . . . . . .     267     181      74
Nondeposit product sales commission . . .     110     165     206
Other . . . . . . . . . . . . . . . . . .     313     312     256
                                           ------  ------  ------
                                           $  964  $  953  $  752
                                           ======  ======  ======
OTHER EXPENSES:
Advertising and public relations. . . . .  $  271  $  230  $  176
Stationary, printing and office support .     357     386     364
Merchant and credit card service expense.     386     391     298
Legal and professional fees . . . . . . .     395     335     240
Amortization of intangibles . . . . . . .       -     157     157
Other . . . . . . . . . . . . . . . . . .     658     626     549
                                           ------  ------  ------
                                           $2,067  $2,125  $1,784
                                           ======  ======  ======
</TABLE>


NOTE  12  -  COMMON  STOCK  AND  PER  SHARE  INFORMATION
     On  December 5, 2002, the Company issued a 5% stock dividend.  The dividend
was  issued  to  all shareholders of record on November 22, 2002 and resulted in
the  issuance  of  approximately  190,000 shares of common stock of the Company.
All average share and per share data have been retroactively restated to reflect
the  stock  dividend  as  of  the  earliest  period  presented.

     As  of  December  31,  2002, there were approximately 947,000 common shares
reserved  for  issuance  under  stock  compensation  benefit  plans,  of  which
approximately  347,000  were  available  for  issuance.

     The  following  is  a  reconciliation  of the denominators of the basic and
diluted per share computations for net income.  There was no required adjustment
to  the  numerator from the net income reported on the accompanying consolidated
statements  of  income.

<TABLE>
<CAPTION>

                                         2002                    2001                   2000
                                ----------------------  ---------------------  ----------------------
                                  BASIC      DILUTED      BASIC      DILUTED      BASIC      DILUTED
                                ----------  ----------  ----------  ----------  ----------  ----------
<S>                             <C>         <C>         <C>         <C>         <C>         <C>
Net income . . . . . . . . . .  $3,442,000  $3,442,000  $2,716,000  $2,716,000  $2,655,000  $2,655,000
                                ----------  ----------  ----------  ----------  ----------  ----------
Average shares outstanding . .   3,977,000   3,977,000   3,936,000   3,936,000   3,902,000   3,902,000
Effect of dilutive securities:
   Stock options . . . . . . .           -     523,000           -     363,000           -     324,000
   Unvested restricted stock .           -      18,000           -      34,000           -      40,000
                                ----------  ----------  ----------  ----------  ----------  ----------
                                 3,977,000   4,518,000   3,936,000   4,333,000   3,902,000   4,266,000
                                ==========  ==========  ==========  ==========  ==========  ==========
Per share amount . . . . . . .  $     0.87  $     0.76  $     0.69  $     0.63  $     0.68  $     0.62
                                ==========  ==========  ==========  ==========  ==========  ==========
</TABLE>

NOTE  13  -  EMPLOYEE  BENEFIT  PLANS
     The  Company  maintains an employee benefit plan for all eligible employees
of  the  Company  and  its subsidiaries under the provisions of Internal Revenue
Code  Section  401K.  The Summit Retirement Savings Plan (the "Plan") allows for
employee  contributions and, upon annual approval of the Board of Directors, the
Company  matches  employee  contributions  from  one percent to a maximum of six
percent  of  deferred  compensation.  The matching contributions as a percent of
deferred  compensation  were  6%  for each year 2002, 2001 and 2000.  A total of
$179,000,  $157,000,  and  $124,000,  respectively,  in 2002, 2001, and 2000 was
charged  to  operations  for the Company's matching contribution.  Employees are
immediately vested in their contributions to the Plan and become fully vested in
the  employer matching contribution after completion of six years of service, as
defined  in  the  Plan.

     During  1998,  Summit  National  Bank  entered  into  salary  continuation
agreements  with  several  key  management employees.  Under the agreements, the
Bank  is  obligated  to  provide  for  each  such  executive  officer  or  his
beneficiaries,  during  a  period  of  20  years  after  the  employee's  death,
disability,  or  retirement,  annual  benefits ranging from $38,000 to $113,000.
The  estimated present value of future benefits to be paid is being accrued over
the  period  from  the  effective  date  of  the  agreements  until the expected
retirement  dates  of the participants.  The expense incurred and amount accrued
for  this  nonqualified salary continuation plan, which is an unfunded plan, for
the  years  ended  December 31, 2002, 2001 and 2000 amounted to $69,000, $62,000
and  $56,000, respectively.  To partially finance benefits to be paid under this
plan,  the  Bank  purchased,  and  is the beneficiary of, several life insurance
policies.  Proceeds  from the insurance policies are payable to the Company upon
the  death  of  the  participant.  The  cash  surrender  value of these policies
included  in  the accompanying consolidated balance sheets in "Other assets" was
$2,109,000  and  $2,012,000  at  December  31,  2002  and  2001,  respectively.

NOTE  14  -  STOCK  COMPENSATION  PLANS
     The  Company  has  a  Restricted  Stock  Plan  for  awards  to  certain key
employees.  Under  the Restricted Stock Plan, the Company may grant common stock
to  its  employees  for  up  to  310,000  shares.  All  shares granted under the
Restricted  Stock  Plan  are subject to restrictions as to continuous employment
for  a  specified  time period following the date of grant.  During this period,
the holder is entitled to full voting rights and dividends.  The restrictions as
to  transferability of shares granted under this plan vest over a period of five
years  at  a  rate  of  20%  per year on each anniversary date of the grant.  At
December  31,  2002,  there were 78,000 shares of common stock outstanding which
were  issued  under  the  Restricted  Stock  Plan,  of  which  8,000 shares were
unvested.  Deferred  compensation  representing  the difference between the fair
market  value  of the stock at the date of grant and the cash paid for the stock
is  amortized  over  the  five-year  vesting  period  as the restrictions lapse.
Included in the accompanying consolidated statements of income under the caption
"Salaries,  wages and benefits" is $128,000, $126,000, and $128,000 of amortized
deferred  compensation  for  the  years  ended December 31, 2002, 2001 and 2000,
respectively.

     The  Company has two Incentive Stock Option Plans, one approved in 1989 and
one  in  2000,  and  a nonqualified Non-Employee Stock Option Plan (collectively
referred  to  as  stock-based  option  plans).  Under the Incentive Stock Option
Plans,  options  are  periodically granted to employees at a price not less than
the  fair  market value of the shares at the date of grant.  Options granted are
exercisable  for  a  period  of  ten  years  from  the  date of grant and become
exercisable  at  a  rate of 20% each year on the first five anniversaries of the
date  of  grant.  The  Incentive  Stock  Option  Plans  initially authorized the
granting  of  stock  options up to a maximum of 1,131,000 shares of common stock
under  both  plans. However, 882,000 of these were reserved under the 1989 Plan,
under  which  no additional options may be granted.  Thus, at December 31, 2002,
249,000  shares  of  common stock are reserved to be granted under the 2000 Plan
and  80,000 of these reserved shares of common stock are available to be granted
under  the  2000  Plan.

     Under  the  Non-Employee  Stock Option Plan, options have been granted at a
price  not less than the fair market value of the shares at the date of grant to
eligible  non-employee  directors as a retainer for their services as directors.
Options  granted  are  exercisable  for  a  period of ten years from the date of
grant.  Options  granted  in  1995 became exercisable one year after the date of
grant.  Options  granted  in 1996 become exercisable over a period of nine years
at  a rate of 11.1% per year on each of the first nine anniversaries of the date
of  grant.  The  Non-Employee Stock Option Plan authorizes the granting of stock
options  up  to  a  maximum  of 388,000 shares of common stock.  At December 31,
2002,  35,000  reserved  shares of common stock are available to be issued under
this  plan.

     All  outstanding  options,  option  price,  and  option  activity  for  all
stock-based option plans have been retroactively restated to reflect the effects
of  all  5%  stock  dividends  issued.

     The  Company  follows  APB  25 to account for its stock-based option plans.
Accordingly, no compensation cost has been recognized for the stock-based option
plans  as all options granted under the plans had an exercise price equal to the
market value of the underlying common stock on the date of grant.  Refer to Note
1  for details of the effect on net income and earnings per share if the Company
had  applied  the  fair  value recognition provisions of SFAS 123 to stock-based
compensation.

     The  weighted  average  fair value per share of options granted in 2002 and
2000  amounted  to  $7.66  and $5.32, respectively.  There were no stock options
granted  during 2001.  Fair values were estimated on the date of grant using the
Black-Scholes  option-pricing  model  with  the  following  assumptions used for
grants:  historical  volatility  of  49.5%  and  63.5%  for  2002  and  2000,
respectively;  risk-free  interest  rate  of  2.70% and 4.95% for 2002 and 2000,
respectively;  and  expected lives of the options of 5.7 years and 4.9 years for
2002  and  2000,  respectively.  There  were  no  cash  dividends  in  any year.

     A  summary of the activity under the stock-based option plans for the years
ended  December  31  and  information  about stock options outstanding under the
stock-based  option  plans  at  December  31,  2002  is  as  follows:

<TABLE>
<CAPTION>
                                  2002                2001                  2000
                           -----------------  -------------------   --------------------
                                    WEIGHTED             WEIGHTED               WEIGHTED
                                     AVERAGE              AVERAGE                AVERAGE
                                    EXERCISE             EXERCISE               EXERCISE
                           SHARES     PRICE     SHARES     PRICE      SHARES      PRICE
                          --------  ---------  --------  ---------  ----------  ---------
<S>                       <C>       <C>        <C>       <C>        <C>         <C>
Outstanding, January 1 .  952,749   $    5.89  982,806   $    5.88  1,050,907   $    4.94
Granted. . . . . . . . .    3,990   $   14.61        -           -    159,520   $    8.36
Canceled . . . . . . . .   (3,561)  $   10.03  (11,925)  $    9.27    (31,428)  $    7.00
Exercised. . . . . . . .  (31,063)  $    4.68  (18,132)  $    3.00   (196,193)  $    2.73
                          --------  ---------  --------  ---------  ----------  ---------
Outstanding, December 31  922,115   $    5.95  952,749   $    5.89    982,806   $    5.88
                          ========  =========  ========  =========  ==========  =========
Exercisable, December 31  723,207   $    5.60  674,396   $    5.35    564,516   $    5.02
                          ========  =========  ========  =========  ==========  =========
</TABLE>

<TABLE>
<CAPTION>

AT DECEMBER 31, 2002                 OPTIONS OUTSTANDING           OPTIONS EXERCISABLE
--------------------------  -----------------------------------   --------------------
                                          WEIGHTED
                                           AVERAGE    WEIGHTED                WEIGHTED
                             NUMBER OF    REMAINING    AVERAGE    NUMBER OF    AVERAGE
                              OPTIONS    CONTRACTUAL  EXERCISE     OPTIONS    EXERCISE
RANGE OF EXERCISE PRICES:   OUTSTANDING     LIFE        PRICE    EXERCISABLE    PRICE
                            -----------  -----------  ---------  -----------  ---------
<S>                         <C>          <C>          <C>        <C>          <C>
3.15 - $3.79. . . . . . .      167,397    1.8 years  $    3.77      167,397  $    3.77
5.08. . . . . . . . . . .      305,021    3.0 years  $    5.08      216,597  $    5.08
5.51 - $5.60. . . . . . .      235,967    4.0 years  $    5.59      235,967  $    5.59
7.56 - $8.21. . . . . . .      136,114    7.2 years  $    8.17       57,384  $    8.13
9.07 - $11.01 . . . . . .       36,177    7.2 years  $    9.68       16,449  $    9.83
12.54 - $12.75. . . . . .       37,449    5.4 years  $   12.55       29,413  $   12.55
14.61 . . . . . . . . . .        3,990    9.9 years  $   14.61            -          -
                            -----------  -----------  ---------  -----------  ---------
3.15  - $14.61. . . . . .      922,115    3.9 years  $    5.95      723,207  $    5.60
                            ===========  ===========  =========  ===========  =========
</TABLE>

NOTE  15  -  REGULATORY  CAPITAL  REQUIREMENTS
     The  Company  and  the  Bank  are  subject  to  various  regulatory capital
requirements  administered  by  the  federal  banking agencies.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possibly
additional discretionary actions by regulators that, if undertaken, could have a
material  effect on the financial statements.  Under capital adequacy guidelines
and  the  regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of
the  Company's  and the Bank's assets, liabilities and certain off-balance sheet
items  as  calculated  under regulatory accounting practices.  The Company's and
the  Bank's  capital  amounts and classification are also subject to qualitative
judgments  by  the  regulators  about  components,  risk  weightings,  and other
factors.

     The  Company  and  the  Bank  are  required to maintain minimum amounts and
ratios  of total risk-based capital, Tier I capital, and Tier I leverage capital
as  set  forth  in the table following.  Management believes, as of December 31,
2002,  that  the  Company and the Bank meet all capital adequacy requirements to
which  they are subject.  At December 31, 2002 and 2001, the Bank is categorized
as  "well  capitalized"  under  the  regulatory  framework for prompt corrective
action.  There  are  no  current  conditions  or events that management believes
would  change  the Company's or the Bank's risk-based capital regulatory-defined
category.

     The  following  table  presents the Company's and the Bank's actual capital
amounts  and  ratios  at  December  31,  2002  and  2001  as well as the minimum
calculated  amounts  for  each  regulatory  defined  category.

<TABLE>
<CAPTION>
                                                              TO BE            TO BE
                                                           CATEGORIZED      CATEGORIZED
                                                           "ADEQUATELY         "WELL
(dollars in thousands)                       ACTUAL        CAPITALIZED"     CAPITALIZED"
-------------------------------------   ---------------  ---------------  ---------------
                                        AMOUNT   RATIO   AMOUNT   RATIO   AMOUNT   RATIO
                                        -------  ------  -------  ------  -------  ------
<S>                                     <C>      <C>     <C>      <C>     <C>      <C>
AS OF DECEMBER 31, 2002
The Company
--------------------------------------
Total capital to risk-weighted assets.  $30,946  13.20%  $18,754   8.00%        N.A.
Tier 1 capital to risk-weighted assets  $28,010  11.95%  $ 9,377   4.00%        N.A.
Tier 1 capital to average assets . . .  $28,010   9.70%  $11,555   4.00%        N.A.
The Bank
--------------------------------------
Total capital to risk-weighted assets.  $27,099  11.69%  $18,543   8.00%  $23,179  10.00%
Tier 1 capital to risk-weighted assets  $24,199  10.44%  $ 9,271   4.00%  $13,907   6.00%
Tier 1 capital to average assets . . .  $24,199   8.48%  $11,411   4.00%  $14,263   5.00%

AS OF DECEMBER 31, 2001
The Company
--------------------------------------
Total capital to risk-weighted assets.  $27,132  12.41%  $17,497   8.00%        N.A.
Tier 1 capital to risk-weighted assets  $24,398  11.16%  $ 8,749   4.00%        N.A.
Tier 1 capital to average assets . . .  $24,398   9.25%  $10,548   4.00%        N.A.
The Bank
--------------------------------------
Total capital to risk-weighted assets.  $23,727  11.00%  $17,252   8.00%  $21,565  10.00%
Tier 1 capital to risk-weighted assets  $21,031   9.75%  $ 8,626   4.00%  $12,939   6.00%
Tier 1 capital to average assets . . .  $21,031   8.07%  $10,429   4.00%  $13,037   5.00%
</TABLE>

NOTE  16  -  REGULATORY  RESTRICTIONS
     The  ability  of  the  Company  to pay cash dividends is dependent upon its
receiving  cash  in the form of dividends from the Bank.  The dividends that may
be  paid  by  the  Bank  to  the  Company  are  subject to legal limitations and
regulatory  capital  requirements.  The  approval  of  the  Comptroller  of  the
Currency  is  required if the total of all dividends declared by a national bank
in  any  calendar  year  exceeds  the  Bank's  net  profits  (as  defined by the
Comptroller) for that year combined with its retained net profits (as defined by
the Comptroller) for the two preceding calendar years.  As of December 31, 2002,
no  cash  dividends  have  been  declared  or  paid by the Bank and the Bank had
available  retained  earnings  of  $15.7  million.

     Under  current  Federal  Reserve  regulations,  the  Bank is limited in the
amount  it  may  loan  to the Company, the Finance Company, or other affiliates.
Loans  made  by  the Bank to a single affiliate may not exceed 10%, and loans to
all affiliates may not exceed 20%, of the Bank's capital, surplus, and undivided
profits,  after  adding  back  the  allowance  for  loan losses.  Based on these
limitations,  approximately  $5.5 million was available for loans to the Company
and  the  Finance Company at December 31, 2002.  Certain collateral restrictions
also  apply  to  loans  from  the  Bank  to  its  affiliates.

NOTE  17  -  OFF-BALANCE  SHEET  FINANCIAL  INSTRUMENTS
     The  Company  is party to financial instruments with off-balance sheet risk
in  the normal course of business to meet the liquidity, credit enhancement, and
financing  needs  of its customers.  These financial instruments include legally
binding  commitments to extend credit and standby letters of credit and involve,
to  varying  degrees, elements of credit and interest rate risk in excess of the
amount  recognized  in  the  balance  sheet.  Credit  risk is the principal risk
associated  with these instruments. The contractual amounts of these instruments
represent  the  amount of credit risk should the instruments be fully drawn upon
and  the  customer  defaults.

     To  control  the  credit risk associated with entering into commitments and
issuing  letters of credit, the Company uses the same credit quality, collateral
policies, and monitoring controls in making commitments and letters of credit as
it  does  with  its  lending  activities.  The Company evaluates each customer's
creditworthiness on a case-by-case basis.  The amount of collateral obtained, if
deemed  necessary  by  the  Company  upon  extension  of  credit,  is  based  on
management's  credit  evaluation.

     Legally  binding  commitments  to extend credit are agreements to lend to a
customer  as  long  as there is no violation of any condition established in the
contract.  Commitments  generally  have  fixed  expiration  dates  or  other
termination  clauses  and  may  require  payment  of  a  fee.  Since many of the
commitments may expire without being drawn upon, the total commitment amounts do
not  necessarily  represent future cash requirements.  Standby letters of credit
obligate the Company to meet certain financial obligations of its customers, if,
under the contractual terms of the agreement, the customers are unable to do so.
The  financial  standby letters of credit issued by the Company are irrevocable.
Payment  is  only  guaranteed  under these letters of credit upon the borrower's
failure  to  perform  its obligations to the beneficiary.  As such, there are no
"stand-ready  obligations" in any of the letters of credit issued by the Company
and  the  contingent  obligations  are  accounted for in accordance with SFAS 5,
"Accounting  for  Contingencies".

     At  December 31, the Company's total contractual amounts of commitments and
letters  of  credit  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)                                      2002     2001
---------------------------------------------------------  -------  -------
<S>                                                        <C>      <C>
Legally binding commitments to extend credit:
   Commercial and industrial. . . . . . . . . . . . . . .  $18,474  $16,991
   Residential real estate, including prime equity lines.   18,499   15,575
   Construction and development . . . . . . . . . . . . .   12,971    7,424
   Consumer and overdraft protection. . . . . . . . . . .    2,927    2,453
                                                           -------  -------
                                                            52,871   42,443
Standby letters of credit . . . . . . . . . . . . . . . .    3,607    4,798
                                                           -------  -------
Total commitments . . . . . . . . . . . . . . . . . . . .  $56,478  $47,241
                                                           =======  =======
</TABLE>

     Approximately  $2,535,000  and  $2,804,000 of total commitments at December
31, 2002 and 2001, respectively, represent commitments to extend credit at fixed
rates  of  interest,  which  exposes the Company to some degree of interest rate
risk.

NOTE  18  -  CONTINGENT  LIABILITIES  AND  COMMITMENTS
     In  the  normal  course  of  business, the Company and its subsidiaries are
periodically  subject  to various pending or threatened lawsuits in which claims
for  monetary  damages  may  be  asserted.  In  the  opinion  of  the  Company's
management,  after  consultation  with  legal  counsel,  none of this litigation
should  have  a  material  adverse effect on the Company's financial position or
results  of  operations.

     The  Company  leases  branch  facilities  for both the Bank and the Finance
Company.  These  leases  have initial terms of from two to ten years and various
renewal  options  under  substantially  the  same  terms  with  certain  rate
escalations.   Rent  expense  charged  to operations totaled $290,000, $299,000,
and  $297,000,  respectively,  for  the years ended December 31, 2002, 2001, and
2000.  The  annual  minimum  rental commitments under the terms of the Company's
noncancellable  leases  subsequent  to  December 31, 2002 are: $280,000 in 2003;
$230,000 in 2004; $60,000 in 2005; and $6,000 in 2006 totaling lease commitments
of  $576,000.  There  are  no  commitments  after  2006.

NOTE  19  -  RELATED  PARTY  TRANSACTIONS
     Directors, executive officers, and associates of such persons are customers
of  and  have  transactions  with  the Company's bank subsidiary in the ordinary
course  of  business.  Included  in  such transactions are outstanding loans and
commitments,  all  of  which are made under substantially the same credit terms,
including  interest  rates  and  collateral, as those prevailing at the time for
comparable  transactions with unrelated persons and do not involve more than the
normal  risk  of  collectibility.  All loans to related parties were current and
performing  in  accordance  with  contractual  terms  at December 31, 2002.  The
aggregate  dollar  amount  of  loans  outstanding  to  related  parties  was
approximately  $5,333,000  and  $4,482,000  at  December  31,  2002  and  2001,
respectively.  During  2002,  new  loans  and  advances  on  lines  of credit of
approximately  $11,431,000  were  made,  and  payments  on these loans and lines
totaled approximately $10,580,000.  At December 31, 2002, there were commitments
to  extend  additional  credit to related parties in the amount of approximately
$2,565,000.

NOTE  20  -  SEGMENT  INFORMATION
     The  Company reports information about its operating segments in accordance
with  SFAS  131,  "Disclosures  about  Segments  of  an  Enterprise  and Related
Information".  Summit  Financial  Corporation  is the parent holding company for
Summit National Bank ("Bank"), a nationally chartered bank, and Freedom Finance,
Inc.  ("Finance"),  a  consumer finance company.  The Company considers the Bank
and  the  Finance Company separate business segments.  Financial performance for
each  segment  is detailed in the following tables.  Included in the "Corporate"
column  are  amounts  for  general  corporate  activities  and  eliminations  of
intersegment  transactions.

<TABLE>
<CAPTION>

(dollars in thousands)         BANK    FINANCE    CORPORATE    TOTAL
---------------------------  --------  --------  -----------  --------
<S>                          <C>       <C>       <C>          <C>
AT AND FOR THE YEAR ENDED
 DECEMBER 31, 2002
Interest income . . . . . .  $ 15,931  $  1,924        ($34)  $ 17,821
Interest expense. . . . . .     6,166       184        (176)     6,174
                             --------  --------  -----------  --------
Net interest income . . . .     9,765     1,740         142     11,647
Provision for loan losses .       530       317           -        847
Noninterest income. . . . .     2,394       337         (60)     2,671
Noninterest expenses. . . .     7,037     1,379          28      8,444
                             --------  --------  -----------  --------
Income before income taxes.     4,592       381          54      5,027
Income taxes. . . . . . . .     1,423       142          20      1,585
                             --------  --------  -----------  --------
Net income. . . . . . . . .  $  3,169  $    239  $       34   $  3,442
                             ========  ========  ===========  ========
Net loans . . . . . . . . .  $213,318  $  3,298     ($1,185)  $215,431
                             ========  ========  ===========  ========
Total assets. . . . . . . .  $298,484  $  3,938       ($216)  $302,206
                             ========  ========  ===========  ========
</TABLE>

<TABLE>
<CAPTION>

(dollars in thousands)         BANK    FINANCE    CORPORATE    TOTAL
---------------------------  --------  --------  -----------  --------
<S>                          <C>       <C>       <C>          <C>
AT AND FOR THE YEAR ENDED
 DECEMBER 31, 2001
Interest income . . . . . .  $ 18,439  $  1,813        ($47)  $ 20,205
Interest expense. . . . . .     9,776       266        (235)     9,807
                             --------  --------  -----------  --------
Net interest income . . . .     8,663     1,547         188     10,398
Provision for loan losses .       478       247           -        725
Noninterest income. . . . .     2,293       337         (48)     2,582
Noninterest expenses. . . .     6,763     1,482          14      8,259
                             --------  --------  -----------  --------
Income before income taxes.     3,715       155         126      3,996
Income taxes. . . . . . . .     1,174        60          46      1,280
                             --------  --------  -----------  --------
Net income. . . . . . . . .  $  2,541  $     95  $       80   $  2,716
                             ========  ========  ===========  ========
Net loans . . . . . . . . .  $201,682  $  3,368       ($946)  $204,104
                             ========  ========  ===========  ========
Total assets. . . . . . . .  $269,570  $  3,964       ($437)  $273,097
                             ========  ========  ===========  ========
</TABLE>

<TABLE>
<CAPTION>

(dollars in thousands)         BANK     FINANCE    CORPORATE    TOTAL
---------------------------  --------  --------  -----------  --------
<S>                          <C>       <C>        <C>          <C>
AT AND FOR THE YEAR ENDED
 DECEMBER 31, 2000
Interest income . . . . . .  $ 17,787  $  1,744        ($114)  $ 19,417
Interest expense. . . . . .     9,356       342         (304)     9,394
                             --------  ---------  -----------  --------
Net interest income . . . .     8,431     1,402          190     10,023
Provision for loan losses .       495       159            -        654
Noninterest income. . . . .     1,562       332          (48)     1,846
Noninterest expenses. . . .     5,847     1,514           (5)     7,356
                             --------  ---------  -----------  --------
Income before income taxes.     3,651        61          147      3,859
Income taxes. . . . . . . .     1,155        (6)          55      1,204
                             --------  ---------  -----------  --------
Net income. . . . . . . . .  $  2,496  $     67   $       92   $  2,655
                             ========  =========  ===========  ========
Net loans . . . . . . . . .  $176,088  $  3,314      ($1,441)  $177,961
                             ========  =========  ===========  ========
Total assets. . . . . . . .  $247,360  $  4,000      ($1,525)  $249,835
                             ========  =========  ===========  ========
</TABLE>


NOTE  21  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS
     The Company estimates the fair value of financial instruments in accordance
with  SFAS  107,  "Disclosures about Fair Value of Financial Instruments".  Fair
value  is  assumed  to  approximate  book  value  for  the  following  financial
instruments  due  to  the short-term nature of the instrument: cash and due from
banks,  interest-bearing bank balances, federal funds sold, and other short-term
borrowings.  Fair  value  of  investment securities is estimated based on quoted
market  prices where available.  If quoted market prices are not available, fair
values  are  based  on  quoted  market  prices  of  comparable  instruments.

     Fair  value  for  variable rate loans that reprice frequently and for loans
that  mature in less that one year is based on the carrying value, reduced by an
estimate  of  credit losses inherent in the portfolio.  Fair value of fixed rate
real  estate,  consumer,  commercial  and other loans maturing after one year is
based  on  the  discounted  present  value  of  the estimated future cash flows,
reduced  by  an  estimate  of credit losses inherent in the portfolio.  Discount
rates  used  in  these  computations approximate the rates currently offered for
similar loans of comparable terms and credit quality.  The estimated fair market
value of commitments to extend credit and standby letters of credit are equal to
their carrying value as the majority of these off-balance sheet instruments have
relatively  short  terms  to  maturity  and  are  written with variable rates of
interest.

     Fair  value  for demand deposit accounts and variable rate interest-bearing
accounts  is  equal to the carrying value.  Fair value of certificate of deposit
accounts  are estimated by discounting cash flows from expected maturities using
current  interest rates on similar instruments.  Fair value for FHLB advances is
based  on  discounted  cash  flows  using  the  current  market  rate.

     The Company has used management's best estimate of fair values based on the
above assumptions.  Thus, the fair values presented may not be the amounts which
could  be  realized  in  an  immediate sale or settlement of the instrument.  In
addition,  any income tax or other expenses which would be incurred in an actual
sale  or  settlement  are  not  taken  into  consideration  in  the  fair values
presented.  The  estimated fair values of the Company's financial instruments as
of  December  31  are  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)                             2002                  2001
---------------------------------------   ---------------------   ---------------------
                                          CARRYING    ESTIMATED   CARRYING    ESTIMATED
                                           AMOUNT    FAIR VALUE    AMOUNT    FAIR VALUE
                                          ---------  -----------  ---------  -----------
<S>                                       <C>        <C>          <C>        <C>
FINANCIAL ASSETS:
Cash and due from banks. . . . . . . . .  $   6,929  $     6,929  $   8,579  $     8,579
Interest-bearing bank balances . . . . .      2,176        2,176        945          945
Federal funds sold . . . . . . . . . . .      2,491        2,491        925          925
Investment securities available for sale     63,464       63,464     47,400       47,400
Loans, net . . . . . . . . . . . . . . .    215,431      224,011    204,104      216,977
FINANCIAL LIABILITIES:
Deposits . . . . . . . . . . . . . . . .    230,515      229,155    218,778      219,914
Other short-term borrowings. . . . . . .          -            -        500          500
Federal Home Loan Bank advances. . . . .     40,600       39,398     26,900       26,121
</TABLE>


NOTE  22  -  PARENT  COMPANY  FINANCIAL  INFORMATION
     The  following  is  condensed  financial  information  of  Summit Financial
Corporation  (parent  company  only)  at  December 31, 2002 and 2001 and for the
years  ended  December  31,  2002,  2001,  and  2000.

<TABLE>
<CAPTION>
                 SUMMIT FINANCIAL CORPORATION
                   CONDENSED BALANCE SHEETS

                                         DECEMBER 31,
                                       ----------------
(dollars in thousands)                  2002     2001
-------------------------------------  -------  -------
<S>                                    <C>      <C>
ASSETS
Cash. . . . . . . . . . . . . . . . .  $   134  $   331
Interest-bearing deposits . . . . . .    1,139      613
Investment in bank subsidiary . . . .   24,800   21,234
Investment in nonbank subsidiary. . .      454      215
Due from subsidiaries . . . . . . . .    2,268    2,243
Other assets. . . . . . . . . . . . .        -        2
                                       -------  -------
                                       $28,795  $24,638
                                       =======  =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accruals and other liabilities. . . .  $    39  $    35
Due to subsidiaries . . . . . . . . .       14        2
Shareholders' equity. . . . . . . . .   28,742   24,601
                                       -------  -------
                                       $28,795  $24,638
                                       =======  =======
</TABLE>

<TABLE>
<CAPTION>
               SUMMIT FINANCIAL CORPORATION
              CONDENSED STATEMENTS OF INCOME

                                     FOR THE YEARS ENDED
                                         DECEMBER 31,
                                     ----------------------
(dollars in thousands)                2002    2001    2000
-----------------------------------  ------  ------  ------
<S>                                  <C>     <C>     <C>

Interest income . . . . . . . . . .  $  142  $  188  $  191
Interest expense. . . . . . . . . .       -       -       -
                                     ------  ------  ------
Net interest income . . . . . . . .     142     188     191
Noninterest expenses. . . . . . . .      88      62      43
                                     ------  ------  ------
Net operating income. . . . . . . .      54     126     148
Equity in undistributed net income
 of subsidiaries. . . . . . . . . .   3,408   2,636   2,562
                                     ------  ------  ------
Income before taxes . . . . . . . .   3,462   2,762   2,710
Income taxes. . . . . . . . . . . .      20      46      55
                                     ------  ------  ------
Net income. . . . . . . . . . . . .  $3,442  $2,716  $2,655
                                     ======  ======  ======
</TABLE>

<TABLE>
<CAPTION>
                      SUMMIT FINANCIAL CORPORATION
                   CONDENSED STATEMENTS OF CASH FLOWS

                                                    FOR THE YEARS ENDED DECEMBER 31,
                                                    --------------------------------
(dollars in thousands)                                    2002      2001      2000
------------------------------------------------------  --------  --------  --------
<S>                                                     <C>       <C>       <C>
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . .  $ 3,442   $ 2,716   $ 2,655
Adjustments to reconcile net income to net cash
  provided by operating activities:
Equity in undistributed net income of subsidiaries . .   (3,408)   (2,636)   (2,562)
Decrease (increase) in other assets. . . . . . . . . .        2        (2)        -
Increase (decrease) in other liabilities . . . . . . .        4         8       (13)
Amortization of deferred compensation. . . . . . . . .      128       126       128
                                                        --------  --------  --------
     Net cash provided by operating activities . . . .      168       212       208
                                                        --------  --------  --------
INVESTING ACTIVITIES:
Net (increase) decrease in due from subsidiaries . . .      (25)     (383)       19
Net increase in due to subsidiaries. . . . . . . . . .       12         2         -
                                                        --------  --------  --------
     Net cash (used) provided by investing activities.      (13)     (381)       19
                                                        --------  --------  --------
FINANCING ACTIVITIES:
Employee stock options exercised . . . . . . . . . . .      178        63       561
Cash paid in lieu of fractional shares . . . . . . . .       (4)       (3)       (2)
                                                        --------  --------  --------
     Net cash provided by financing activities . . . .      174        60       559
                                                        --------  --------  --------
Net increase (decrease) in cash and cash equivalents .      329      (109)      786
Balance, beginning of year . . . . . . . . . . . . . .      944     1,053       267
                                                        --------  --------  --------
Balance, end of year . . . . . . . . . . . . . . . . .  $ 1,273   $   944   $ 1,053
                                                        ========  ========  ========
</TABLE>


QUARTERLY  OPERATING  RESULTS
     Supplementary  quarterly  data  with respect to the Company can be found in
Item  7, Management's Discussion and Analysis of Financial Condition and Results
of  Operations,  under  "Quarterly  Operating  Results",  which  information  is
incorporated  herein  by  reference.

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The  Board  of  Directors
Summit  Financial  Corporation

     We  have  audited  the  accompanying  consolidated balance sheets of Summit
Financial  Corporation  and subsidiaries (the "Company") as of December 31, 2002
and  2001,  and  the  related  consolidated  statements of income, shareholders'
equity  and  comprehensive  income  and  cash flows for each of the years in the
three-year  period  ended  December  31,  2002.  These  consolidated  financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based  on  our  audits.

     We  conducted  our  audits  in accordance with auditing standards generally
accepted  in the United States of America.  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material  respects,  the financial position of Summit
Financial Corporation and subsidiaries as of December 31, 2002 and 2001, and the
results  of  their  operations and their cash flows for each of the years in the
three-year  period  ended  December  31,  2002,  in  conformity  with accounting
principles  generally  accepted  in  the  United  States  of  America.

     As discussed in Note 1 to the consolidated financial statements, on January
1,  2002,  the  Company  adopted Statement of Financial Accounting Standards No.
142,  "Goodwill  and  Other  Intangible  Assets".


/s/  KPMG  LLP


Greenville,  South  Carolina
January  28,  2003


                               MANAGEMENT'S REPORT

     The  management  of  Summit  Financial  Corporation  is responsible for the
preparation  and  integrity  of  the consolidated financial statements and other
information  presented  in  this  annual  report.  The  consolidated  financial
statements have been prepared in accordance with accounting principles generally
accepted  in  the  United  States  of  America  and  include  amounts  based  on
management's  estimates  and  judgment  with  respect  to  certain  events  and
transactions.

     Management  is  responsible  for  maintaining a system of internal control.
The  purpose  of the system is to provide reasonable assurance that transactions
are  recorded  in  accordance  with  management's authorization, that assets are
safeguarded  against  loss  or  unauthorized  use, and that underlying financial
records  support  the  preparation of financial statements.  The system includes
the  communication  of  written  policies and procedures, selection of qualified
personnel, appropriate segregation of responsibilities, and the ongoing internal
audit  function.

     The  Audit  Committee  meets  periodically  with  Company  management,  the
internal  auditor,  and  the  independent  auditors, KPMG LLP, to review matters
relative  to  the  quality  of  financial  reporting,  internal control, and the
nature,  extent  and  results  of  the  audit  efforts.

     The  independent auditors conduct an annual audit to enable them to express
an  opinion  on  the Company's consolidated financial statements.  In connection
with the audit, the independent auditors consider the Company's internal control
to  the  extent  they  consider  necessary  to determine the nature, timing, and
extent  of  their  auditing  procedures.


     /s/  J.  Randolph  Potter                         /s/  Blaise B. Bettendorf

     J.  Randolph  Potter                              Blaise  B.  Bettendorf
     President  and  Chief  Executive Officer          Senior Vice President and
                                                      Chief  Financial  Officer

<PAGE>

ITEM  9.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURES

     There  have  been  no  changes  in  or  disagreements  with  accountants on
accounting  and  financial  disclosure as defined by Item 304 of Regulation S-K.

                                    PART III

ITEM  10.       DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information  required  by  this  item  is set forth under the headings
"Proposal  1 - Election of Directors", "Executive Officers and Compensation" and
"Section  16(a)  Beneficial  Ownership  Reporting  Compliance" in the definitive
Proxy  Statement of the Company filed in connection with its 2003 Annual Meeting
of  Shareholders,  which  information  is  incorporated  herein  by  reference.

ITEM  11.       EXECUTIVE  COMPENSATION

     The  information  required  by  this  item  is set forth under the headings
"Directors'  Compensation", "Executive Officers and Compensation", "Compensation
Committee  Report",  and  "Stock  Performance  Graph"  in  the  definitive Proxy
Statement  of  the  Company  filed in connection with its 2003 Annual Meeting of
Shareholders,  which  information  is  incorporated  herein  by  reference.

ITEM  12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS

     The  information  required  by  this  item  is set forth under the headings
"Stock  Ownership"  and  "Proposal  1 - Election of Directors" in the definitive
Proxy  Statement of the Company filed in connection with its 2003 Annual Meeting
of  Shareholders,  which  information  is  incorporated  herein  by  reference.

ITEM  13.       CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information  required  by  this  item  is  set forth under the heading
"Compensation  Committee Interlocks and Insider Participation" and "Transactions
with  Management"  in  the  definitive  Proxy  Statement of the Company filed in
connection  with  its  2003 Annual Meeting of Shareholders, which information is
incorporated  herein  by  reference.

ITEM  14.  CONTROLS  AND  PROCEDURES

(a)  Evaluation  of  Disclosure  Controls  and  Procedures

     The  Company  maintains  controls  and  procedures  designed to ensure that
information  required  to  be disclosed in the reports that the Company files or
submits  under  the  Securities and Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of  the Securities and Exchange Commission ("SEC").  Based upon their evaluation
of  those controls and procedures performed within 90 days of the filing date of
this  report, the chief executive officer and the chief financial officer of the
Company  concluded  that  the  Company's disclosure controls and procedures were
adequate  and  effective  in  timely alerting management to material information
relating to the Company (including its consolidated subsidiaries) required to be
included  in  the  Company's  periodic  SEC  filings.

(b)  Changes  in  Internal  Controls

     The  Company  made  no  significant changes in its internal controls or, to
management's  knowledge,  other  factors  that  could significantly affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive  officer  and  chief  financial  officer.

<PAGE>

                                     PART IV

ITEM  15.     EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  &  REPORTS ON FORM 8-K

(a)     List  of  documents  filed  as  a  part  of  this  report:

     1.  Financial  Statements:

          The  following  consolidated  financial  statements  and  report  of
          independent  auditors  of  the  Company  are included in Part II,
          Item 8 hereof:

          Consolidated  Balance  Sheets  as  of  December  31,  2002  and  2001
          Consolidated  Statements  of  Income  For The Years Ended December 31,
            2002,  2001,  and  2000
          Consolidated  Statements  of  Shareholders'  Equity  And Comprehensive
            Income For The  Years  Ended  December  31,  2002,  2001,  and  2000
          Consolidated Statements of Cash Flows For The Years Ended December 31,
            2002,  2001,  and  2000
          Notes  to  Consolidated  Financial  Statements
          Independent  Auditors'  Report

     2.  Financial  Statement  Schedules:

         All other consolidated financial statements or schedules have been
         omitted since the required information is included in the consolidated
         financial statements or notes thereto referenced in Item 15(a)1 above,
         or is not applicable or required.

     3.  Exhibits  (numbered  in  accordance  with  Item 601 of Regulation S-K):

     3.1     Articles of Incorporation, as amended (incorporated by reference to
Exhibit 3.1 filed with the Registrant's Registration Statement on Form S-1 Under
The  Securities  Act  of  1933,  File  No.  33-31466).

     3.2     Amended  and  Restated Bylaws (incorporated by reference to Exhibit
3.2  filed with the Registrant's Quarterly Report on Form 10-Q for the quarterly
period  ended  June  30,  2002,  File  No.  000-19235).

     4.     Form  of  Certificate for Common Stock (incorporated by reference to
Exhibit  4 filed with the Registrant's Registration Statement on Amendment No. 1
To  Form  S-1  Under  The  Securities  Act  of  1933,  File  No.  33-31466).

***     10.1     Summit Financial Corporation Incentive Stock Plan (incorporated
by  reference to Exhibit 10.1 filed with the Registrant's Registration Statement
on  Form  S-1  Under  The  Securities  Act  of  1933,  File  No.  33-31466).

        10.2     Lease  Agreement  for  North  Pleasantburg  Drive  Bank  Site
(incorporated  by  reference  to  Exhibit  10.2  filed  with  the  Registrant's
Registration  Statement  on  Form S-1 Under The Securities Act of 1933, File No.
33-31466).

***     10.3     Employment  Agreement  of J. Randolph Potter dated December 21,
1998  (incorporated  by  reference  to  Exhibit 10.3 filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year ended December 31, 1998, File No.
000-19235).

***     10.4     Employment Agreement of Blaise B. Bettendorf dated December 21,
1998  (incorporated  by  reference  to  Exhibit 10.4 filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year ended December 31, 1998, File No.
000-19235).

***     10.5     Summit  Financial  Corporation  Restricted  Stock  Plan
(incorporated  by  reference  to Exhibit 10.5 filed with the Registrant's Annual
Report  on  Form 10-K for the year ended December 31, 1993, File No. 000-19235).

***     10.6     Summit  Financial  Corporation  Non-Employee  Stock Option Plan
(incorporated  by  reference  to Exhibit 10.6 filed with the Registrant's Annual
Report  on  Form 10-K for the year ended December 31, 1994, File No. 000-19235).

***     10.7     Employment  Agreement  of  James B. Schwiers dated September 2,
1999  (incorporated  by  reference  to  Exhibit 10.7 filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year ended December 31, 1999, File No.
000-19235).

***     10.8     Summit  Financial  Corporation  1999  Incentive  Stock  Plan
(incorporated  by reference to Exhibit 10.8 filed the Registrant's Annual Report
on  Form  10-K  for  the  year  ended  December  31,  1999, File No. 000-19235).

***     10.9     Employment  Agreement  of  James G. Bagnal dated April 20, 2000
(incorporated  by  reference  to Exhibit 10.9 filed with the Registrant's Annual
Report  on  Form 10-K for the year ended December 31, 2000, File No. 000-19235).

        10.10     Lease  Agreement  for  East  North  Street  Bank Site
(incorporated by reference  to  Exhibit  10.10  filed with the Registrant's
Annual Report on Form 10-K  for  the  year  ended  December  31,  2000,
File  No.  000-19235)

***     10.11     Salary  Continuation  Agreement  of  J.  Randolph Potter dated
September  9,  1998  (incorporated  by reference to Exhibit 10.11 filed with the
Registrant's  Annual  Report  on Form 10-K for the year ended December 31, 2000,
File  No.  000-19235)  .

***     10.12     Salary  Continuation  Agreement  of Blaise B. Bettendorf dated
September  9,  1998  (incorporated  by reference to Exhibit 10.12 filed with the
Registrant's  Annual  Report  on Form 10-K for the year ended December 31, 2000,
File  No.  000-19235).

***     10.13     Salary  Continuation  Agreement  of  James  B.  Schwiers dated
September  9,  1998  (incorporated  by reference to Exhibit 10.13 filed with the
Registrant's  Annual  Report  on Form 10-K for the year ended December 31, 2000,
File  No.  000-19235).

     21   Subsidiaries  of  Summit  Financial  Corporation:
          Summit  National  Bank,  a  nationally chartered bank, incorporated in
           South  Carolina
          Summit  Investment  Services,  Inc.,  a  subsidiary of Summit National
           Bank,  incorporated  in  South  Carolina
          Freedom  Finance,  Inc.,  a  consumer finance company, incorporated in
           South  Carolina

     23     Consent  of  KPMG LLP with regard to S-8 Registration Statements for
Summit Financial Corporation Restricted Stock Plan (as filed with the Securities
and  Exchange  Commission,  "SEC",  August  23, 1994, File No. 33-83538); Summit
Financial  Corporation  Incentive  Stock Option Plan (as filed with the SEC July
19,  1995,  File  No.  33-94962); Summit Financial Corporation 1995 Non-Employee
Stock  Option  Plan (as filed with the SEC July 19, 1995, File No. 33-94964) and
Summit Financial Corporation 1999 Incentive Stock Option Plan (as filed with the
SEC  November  21,2002,  File  No.  333-101367).

     99.1    Certification of Chief Executive Officer  pursuant  to  18  U.S.C.
Section 1350,  as  adopted  pursuant  to  Section  906  of  the  Sarbanes-Oxley
Act of 2002

     99.2    Certification of Chief Financial Officer  pursuant  to  18  U.S.C.
Section 1350,  as  adopted  pursuant  to  Section  906  of  the  Sarbanes-Oxley
Act of 2002


NOTE:  The  exhibits  listed above will be furnished to any security holder upon
written  request  to  Ms.  Blaise B. Bettendorf, Chief Financial Officer, Summit
Financial  Corporation,  Post Office Box 1087, Greenville, South Carolina 29602.
The Registrant will charge a fee of $.50 per page for photocopying such exhibit.



     (b)     No  reports  on  Form  8-K  were filed by the Registrant during the
fourth  quarter  of  2002.

     (c)     Exhibits required to be filed with this report, which have not been
previously  filed  as indicated in Item 15(a) above, are submitted as a separate
section  of  this  report.

     (d)     Not  applicable.


***  -  Management  contracts  or  compensatory  plan  or  arrangement.

<PAGE>


                                   SIGNATURES
     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized.

                              SUMMIT  FINANCIAL  CORPORATION
                                /s/  J.  Randolph  Potter
                              ---------------------------
Dated:  March  17,  2003       J.  Randolph  Potter,  President

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.

<TABLE>
<CAPTION>

     SIGNATURE                    TITLE                      DATE

<S>                         <C>                         <C>
  /s/ J. Randolph Potter .  President, Chief Executive  March 17, 2003
--------------------------    Officer and Director
J. Randolph Potter

  /s/ Blaise B. Bettendorf  Senior Vice President       March 17, 2003
--------------------------   (Principal Financial and
Blaise B. Bettendorf          Accounting Officer)

  /s/ C. Vincent Brown . .  Chairman, Director          March 17, 2003
--------------------------
C. Vincent Brown

  /s/ David C. Poole . . .  Secretary, Director         March 17, 2003
--------------------------
David C. Poole

  /s/ James G. Bagnal, III  Director                    March 17, 2003
--------------------------
James G. Bagnal, III

  /s/ Ivan E. Block. . . .  Director                    March 17, 2003
--------------------------
Ivan E. Block

  /s/ J. Earle Furman, Jr.  Director                    March 17, 2003
--------------------------
J. Earle Furman, Jr.

 /s/ John W. Houser. . . .  Director                    March 17, 2003
--------------------------
John W. Houser

 /s/ T. Wayne McDonald . .  Director                    March 17, 2003
--------------------------
T. Wayne McDonald

 /s/ Allen H. McIntyre . .  Director                    March 17, 2003
--------------------------
T. Wayne McDonald

  /s/ Larry A. McKinney. .  Director                    March 17, 2003
--------------------------
Larry A. McKinney

  /s/ James B. Schwiers. .  Director                    March 17, 2003
--------------------------
James B. Schwiers

</TABLE>


<PAGE>


                                 CERTIFICATIONS

I,  J.  Randolph  Potter,  certify  that:

1.     I  have  reviewed  this  annual  report  on Form 10-K of Summit Financial
Corporation;

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.     The  registrant's  other  certifying  officers  and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:
a)  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;
b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date");  and
c)  presented  in  this annual report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;

5.     The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
functions):
a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and
b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and

6.     The  registrant's  other certifying officers and I have indicated in this
annual  report whether there were significant changes in internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date:  March  17,  2003

/s/  J.  Randolph  Potter
-------------------------
J.  Randolph  Potter,  President  and  Chief  Executive  Officer


<PAGE>


                                 CERTIFICATIONS

I,  Blaise  B.  Bettendorf  certify  that:

1.     I  have  reviewed  this  annual  report  on Form 10-K of Summit Financial
Corporation;

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.     The  registrant's  other  certifying  officers  and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:
a)  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;
b)  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date");  and
c)  presented  in  this annual report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;

5.     The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
functions):
a)  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and
b)  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and

6.     The  registrant's  other certifying officers and I have indicated in this
annual  report whether there were significant changes in internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date:  March  17,  2003

/s/  Blaise  B.  Bettendorf
---------------------------
Blaise  B.  Bettendorf,  Senior  Vice  President
  and  Chief  Financial  Officer